MANNATECH INC Rapport de gestion et analyse de la situation financière et des résultats d’exploitation (formulaire 10-Q)

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The following discussion is intended to assist in the understanding of our
consolidated financial position and results of operations for the three and six
months ended June 30, 2022 as compared to the same period in 2021, and should be
read in conjunction with Item 1 "Financial Statements" in Part I of this
quarterly report on Form 10-Q and Item 1A "Risk Factors" in Part I of our 2021
Annual 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. To supplement our financial results presented in accordance with GAAP, we
disclose certain adjusted financial measures which we refer to as Constant
dollar ("Constant dollar") measures, which are non-GAAP financial measures.
Refer to the Non-GAAP Financial Measures section herein for a description of how
such Constant dollar measures are determined.


PRÉSENTATION DE L’ENTREPRISE


The Company is a global wellness solution provider, which was incorporated and
began operations in November 1993. We develop and sell innovative, high quality,
proprietary nutritional supplements, topical and skin care and anti-aging
products, and weight-management products that target optimal health and
wellness. We 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, Taiwan, Hong Kong, and China). We also ship our
products to customers in the following countries: Belgium, France, Greece,
Italy, Luxembourg, and Poland.

We conduct our business as a single operating segment and primarily sell our
products through a network of approximately 152,000 active associates and
preferred customer positions held by individuals that purchased our products
and/or packs or paid associate fees during the last 12 months, who we refer to
as current associates and preferred customers. New pack sales and the receipt of
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
or packs and products are purchased for the first time under a new account. We
operate as a seller of nutritional supplements, topical and skin care and
anti-aging products, and weight-management products through our network
marketing distribution channels operating in twenty-four countries and direct
e-commerce retail in China. We review and analyze net sales by geographical
location and by packs and 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 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.

La Société maintient un site Web d’entreprise à l’adresse www.mannatech.com.

Conditions économiques actuelles et développements récents


Overall net sales decreased $7.5 million, or 17.7%, to $35.0 million, during the
three months ended June 30, 2022, as compared to the same period in 2021. Net
sales for the six months ended June 30, 2022 decreased by $13.4 million, or
16.7%, to $67.4 million, as compared to the same period in 2021. For each of the
three and six months ended June 30, 2022, our net sales decreased 11.3% on a
Constant dollar basis (see Non-GAAP Measures, below); foreign exchange during
the three and six months ended June 30, 2022 decreased GAAP net sales by $2.7
million and $4.3 million, as compared to the same period in 2021. For the three
and six months ended June 30, 2022, our operations outside of the Americas
accounted for approximately 73.7% and 71.1%, respectively, of our consolidated
net sales.

In addition to the strong US Dollar, supply chain constraints worldwide impacted
sales during the three and six months ended June 30, 2022. For example, in North
America, we have experienced a shortage of an ingredient used in some core
products, and we have begun to move forward with our manufacturing partners with
an alternative.

Pour les trois mois terminés 30 juin 2022la valeur moyenne des commandes de produits a diminué de 11,4 %, pour 176 $comparé à 198 $ pour la même période en 2021. La commande moyenne de produits a diminué de 8,1 % pour 177 $ pour les six mois terminés
30 juin 2022comparé à 193 $ à la même période en 2021.

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RÉSULTATS DES OPÉRATIONS

Trois mois terminés 30 juin 2022 Par rapport aux trois mois terminés 30 juin 2021


The table below summarizes our consolidated operating results in dollars and as
a percentage of net sales for the three months ended June 30, 2022 and 2021 (in
thousands, except percentages):

                                                       2022                                      2021                                     Change from
                                                                                                                                          2021 to 2022
                                           Total                % of                 Total                % of                  Dollar                Percentage
                                          dollars             net sales             dollars             net sales
Net sales                               $ 34,976                   100.0  %       $ 42,504                   100.0  %       $     (7,528)                   (17.7) %
Cost of sales                              7,920                    22.6  %         10,126                    23.8  %             (2,206)                   (21.8) %
Gross profit                              27,056                    77.4  %         32,378                    76.2  %             (5,322)                   (16.4) %

Operating expenses:
Commissions and incentives                14,137                    40.4  %         16,898                    39.8  %             (2,761)                   (16.3) %
Selling and administrative expenses        6,914                    19.8  %          7,571                    17.8  %               (657)                    (8.7) %
Depreciation and amortization expense        301                     0.9  %            442                     1.0  %               (141)                   (31.9) %
Other operating costs                      4,851                    13.9  %          5,449                    12.8  %               (598)                   (11.0) %
Total operating expenses                  26,203                    74.9  %         30,360                    71.4  %             (4,157)                   (13.7) %
Income from operations                       853                     2.4  %          2,018                     4.7  %             (1,165)                   (57.7) %
Interest income                               23                     0.1  %              7                       -  %                 16                    228.6  %
Other income (expense), net                  (84)                   (0.2) %            152                     0.4  %               (236)                  (155.3) %
Income before income taxes                   792                     2.3  %          2,177                     5.1  %             (1,385)                   (63.6) %
    Income tax provision                     (98)                   (0.3) %            (48)                   (0.1) %                (50)                   104.2  %
Net income                              $    694                     2.0  %       $  2,129                     5.0  %       $     (1,435)                   (67.4) %


Semestre terminé 30 juin 2022 Par rapport au semestre clos 30 juin 2021


The table below summarizes our consolidated operating results in dollars and as
a percentage of net sales for the six months ended June 30, 2022 and 2021 (in
thousands, except percentages):

                                                                                                                                      Change from
                                                   2022                                      2021                                     2021 to 2022
                                       Total                % of                 Total                % of
                                      dollars             net sales             dollars             net sales               Dollar                Percentage
Net sales                           $ 67,360                   100.0  %       $ 80,823                   100.0  %       $    (13,463)                   (16.7) %
Cost of sales                         15,011                    22.3  %         17,348                    21.5  %             (2,337)                   (13.5) %
Gross profit                          52,349                    77.7  %         63,475                    78.5  %            (11,126)                   (17.5) %

Operating expenses:
Commissions and incentives            27,245                    40.4  %         32,496                    40.2  %             (5,251)                   (16.2) %
Selling and administrative expenses   13,823                    20.5  %         14,682                    18.2  %               (859)                    (5.9) %
Depreciation and amortization
expense                                  633                     0.9  %            952                     1.2  %               (319)                   (33.5) %
Other operating costs                  9,760                    14.5  %         10,538                    13.0  %               (778)                    (7.4) %
Total operating expenses              51,461                    76.4  %         58,668                    72.6  %             (7,207)                   (12.3) %
Income from operations                   888                     1.3  %          4,807                     5.9  %             (3,919)                   (81.5) %
Interest income                           38                     0.1  %             29                       -  %                  9                     31.0  %
Other (expense) income, net                1                       -  %           (130)                   (0.2) %                131                   (100.8) %
Income before income taxes               927                     1.4  %          4,706                     5.8  %             (3,779)                   (80.3) %
Income tax provision                     (99)                   (0.1) %           (383)                   (0.5) %                284                    (74.2) %
Net income                          $    828                     1.2  %       $  4,323                     5.3  %       $     (3,495)                   (80.8) %


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Non-GAAP Financial Measures

To supplement our financial results presented in accordance with GAAP, we
disclose 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 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. To exclude the impact of changes due to the
translation of foreign currencies into U.S. dollars, we calculate current year
results and prior year results at a constant exchange rate, which is the prior
year's rate. Currency impact is determined as the difference between actual
growth rates and constant currency growth rates.

Three-month period ended                  June 30, 2022                    June 30, 2021                      Constant $ Change
(in millions, except                GAAP               Non-GAAP                GAAP
percentages)                      Measure:             Measure:              Measure:
                                  Total $             Constant $              Total $                  Dollar                   Percent
Net sales                      $      35.0          $      37.7          $         42.5          $           (4.8)                  (11.3) %
Product                               33.0                 35.5                    40.4                      (4.9)                  (12.1) %
Pack sales and associate fees          1.8                  2.0                     1.9                       0.1                     5.3  %
Other                                  0.2                  0.2                     0.2                         -                       -  %
Gross profit                          27.1                 29.3                    32.4                      (3.1)                   (9.6) %
Income from operations                 0.9                  1.6                     2.0                      (0.4)                  (20.0) %



Six-month period ended                    June 30, 2022                    June 30, 2021                      Constant $ Change
(in millions, except                GAAP               Non-GAAP                GAAP
percentages)                      Measure:             Measure:              Measure:
                                  Total $             Constant $              Total $                  Dollar                   Percent
Net sales                      $      67.4          $      71.7          $         80.8          $           (9.1)                  (11.3) %
Product                               63.8                 67.9                    76.3                      (8.4)                  (11.0) %
Pack sales and associate fees          3.1                  3.4                     4.1                      (0.7)                  (17.1) %
Other                                  0.5                  0.5                     0.4                       0.1                    25.0  %
Gross profit                          52.3                 56.0                    63.5                      (7.5)                  (11.8) %
Income from operations                 0.9                  2.0                     4.8                      (2.8)                  (58.3) %




Net Sales

Consolidated net sales for the three months ended June 30, 2022 decreased by
$7.5 million, or 17.7%, to $35.0 million as compared to $42.5 million for the
same period in 2021. Consolidated net sales for the six months June 30, 2022,
decreased by $13.4 million, or 16.7%, to $67.4 million as compared to $80.8
million for the same period in 2021.

Ventes nettes en dollars et en pourcentage de la valeur consolidée Ventes nettes

Ventes nettes consolidées par région pour les trois mois clos 30 juin 2022 et 2021 étaient les suivants (en millions, sauf pourcentages) :

                                                    Three Months Ended                             Three Months Ended
Region                                                June 30, 2022                                  June 30, 2021
Americas                                 $            9.2                 26.3  %       $           12.4                 29.2  %
Asia/Pacific                                         22.7                 64.8  %                   26.1                 61.4  %
EMEA                                                  3.1                  8.9  %                    4.0                  9.4  %
Total                                    $           35.0                100.0  %       $           42.5                100.0  %





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Consolidated net sales by region for the six months ended June 30, 2022 and 2021
were as follows (in millions, except percentages):
                                  Six Months Ended                  Six Months Ended
            Region                 June 30, 2022                     June 30, 2021
            Americas       $          19.5        28.9  %    $          23.3        28.8  %
            Asia/Pacific              41.8        62.0  %               49.7        61.5  %
            EMEA                       6.1         9.1  %                7.8         9.7  %
            Total          $          67.4       100.0  %    $          80.8       100.0  %



For the three months ended June 30, 2022, net sales in the Americas decreased by
$3.2 million, or 25.8%, to $9.2 million, as compared to $12.4 million for the
same period in 2021. We have experienced a shortage of an ingredient used in
some core products, and we have begun to move forward with our manufacturing
partners with an alternative. Our number of active independent associates and
preferred customers declined 10.9% and revenue per active independent associate
and preferred customer declined 16.7%.

For the six months ended June 30, 2022, net sales in the Americas decreased by
$3.8 million, or 16.3%, to $19.5 million, as compared to $23.3 million for the
same period in 2021. Our number of active independent associates and preferred
customers declined 9.7% and revenue per active independent associate and
preferred customers decreased 6.4%.

For the three months ended June 30, 2022, our operations outside of the Americas
accounted for approximately 73.7% of our consolidated net sales, whereas in the
same period in 2021, our operations outside of the Americas accounted for
approximately 70.8% of our consolidated net sales.

For the six months ended June 30, 2022, our operations outside of the Americas
accounted for approximately 71.1% of our consolidated net sales, whereas in the
same period in 2021, our operations outside of the Americas accounted for
approximately 71.2% of our consolidated net sales.

For the three months ended June 30, 2022, Asia/Pacific net sales decreased by
$3.4 million, or 13.0%, to $22.7 million, as compared to $26.1 million for the
same period in 2021. At June 30, 2022, we have deferred $0.3 million revenue for
orders shipped but not received by customers in Hong Kong, $0.2 million of which
were from recent second quarter orders, which is an improvement as compared to
the $0.9 million deferred at March 31, 2022 as logistics in that market improved
during the second quarter. Revenue per active independent associate and
preferred customer decreased 6.6% and the number of active independent
associates and preferred customers decreased 6.9%. Foreign currency exchange had
the effect of decreasing revenue by $2.4 million for the three months ended
June 30, 2022, as compared to the same period in 2021. The currency impact is
primarily due to the weakening of the Korean Won, Japanese Yen, and Australian
Dollar.

For the six months ended June 30, 2022, Asia/Pacific net sales decreased by $7.9
million, or 15.9%, to $41.8 million, as compared to $49.7 million for the same
period in 2021. The result was a 9.5% decrease in revenue per active independent
associate and preferred customer and a 11.5% decrease in the number of active
independent associates and preferred customers. Foreign currency exchange had
the effect of decreasing revenue by $3.9 million for the six months ended
June 30, 2022 as compared to the same period in 2021. The currency impact is
primarily due to the weakening of the Korean Won, Japanese Yen, and Australian
Dollar.

For the three months ended June 30, 2022, EMEA net sales decreased by $0.9
million, or 22.5%, to $3.1 million, as compared to $4.0 million for the same
period in 2021. The decrease was primarily due to a 28.2% decrease in the number
of active independent associates and preferred customers, which was partially
offset by an 8.0% increase in revenue per active independent associate and
preferred customer. We believe the war in Ukraine and inflation are impacting
our business. Foreign currency exchange had the effect of decreasing revenue by
$0.3 million for the three months ended June 30, 2022 as compared to the same
period in 2021. The currency impact is primarily due to the weakening of the
South African Rand, and the Euro.

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For the six months ended June 30, 2022, EMEA net sales decreased by $1.7
million, or 21.8%, to $6.1 million, as compared to $7.8 million for the same
period in 2021. The decrease was primarily due to a 26.6% decrease in the number
of active independent associates and preferred customers, which was partially
offset by an 8.9% increase in revenue per active independent associate and
preferred customer. Foreign currency exchange had the effect of decreasing
revenue by $0.4 million for the six-month period ending June 30, 2022 as
compared to the same period in 2021. The currency impact is primarily due to the
weakening of the South African Rand, and the Euro.

Nos ventes totales et notre composition des ventes pourraient être influencées par l’un des éléments suivants :

•l’impact de la pandémie de COVID-19, la disponibilité et l’efficacité des vaccins à grande échelle et l’impact de toute mutation du virus ;

• le conflit actuel entre Russie et Ukrainece qui pourrait nuire à nos activités dans certaines régions ;

•l’impact de l’inflation ;

•les perturbations de la chaîne d’approvisionnement ;

•l’évolution de nos prix de vente ;

•modifications des frais d’expédition ;

•l’évolution de la demande des consommateurs ;

•l’évolution du nombre d’associés indépendants et de clients privilégiés ;

•l’évolution des produits des concurrents ;

•changements de conditions économiques;

•l’évolution de la réglementation ;

•annonces de nouvelles études scientifiques et percées ;

•l’introduction de nouveaux produits ;

•arrêt de produits existants ;

• publicité négative ;

•modifications de nos programmes de commissions et d’incitatifs ;

•concurrence directe ; et

•les fluctuations des taux de change des devises étrangères.

Notre composition des ventes pour les trois et six mois terminés 30 juinétait la suivante (en millions, sauf les pourcentages) :

                                                         Three Months Ended
                                                              June 30,                                      Change
                                                       2022                  2021              Dollar               Percentage
Consolidated product sales                      $     33.0               $    40.4          $    (7.4)                     (18.3) %
Consolidated pack sales and associate fees             1.8                     1.9               (0.1)                      (5.3) %
Consolidated other                                     0.2                     0.2                  -                          -  %
Total consolidated net sales                    $     35.0               $    42.5          $    (7.5)                     (17.6) %



                                                  Six Months Ended
                                                      June 30,                       Change
                                                  2022            2021       Dollar       Percentage
Consolidated product sales                   $    63.8          $ 76.3      $ (12.5)         (16.4) %
Consolidated pack sales and associate fees         3.1             4.1         (1.0)         (24.4) %
Consolidated other                                 0.5             0.4          0.1           25.0  %
Total consolidated net sales                 $    67.4          $ 80.8      $ (13.4)         (16.6) %





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Product Sales
Our product sales are made to our independent associates and preferred customers
at published wholesale prices.

Product sales for the three months ended June 30, 2022 decreased by $7.4
million, or 18.3%, as compared to the same period in 2021. Product sales
decrease as both the average order value declined and the number of orders
processed decreased. The average order value for the three months ended June 30,
2022 was $176, as compared to $198 for the same period in 2021. The number of
orders processed during the three months ended June 30, 2022 decreased by 8.4%,
to 194,555, as compared to 212,455 for the same period in 2021.

Product sales for the six months ended June 30, 2022 decreased by $12.5 million,
or 16.4%, as compared to the same period in 2021. Product sales decreased as
both the average order value declined and the number of orders processed
decreased. The average order value for the six months ended June 30, 2022 was
$177, as compared to $193 for the same period in 2021. The number of orders
processed during the six months ended June 30, 2022 decreased by 7.2%, to
384,255, as compared to 414,184 for the same period in 2021.

Ventes de packs et frais associés


The Company collects associate fees in lieu of selling packs in certain markets.
Associate fees are paid annually by new and continuing associates to the
Company, which entitle them to earn commissions, benefits and incentives for
that year. The Company collected associate fees in lieu of pack sales 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. 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 and 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. We also do not collect associate fees or sell
packs in our non-direct selling business in mainland China.

The dollar amount of pack sales and associate fees associated with new and
continuing independent associate positions held by individuals in our network
was as follows for the three and six months ended June 30, (in millions, except
percentages):

                                  Three Months Ended
                                       June 30,                         Change
                                    2022             2021       Dollar      Percentage
               New          $      0.1              $ 0.1      $    -              -  %
               Continuing          1.7                1.8        (0.1)          (5.6) %
               Total        $      1.8              $ 1.9      $ (0.1)          (5.3) %


                                     Six Months Ended
                                         June 30,                       Change
                                     2022            2021       Dollar      Percentage
                New            $     0.2            $ 0.2      $    -              -  %
                Continuing           2.9              3.9        (1.0)         (25.6) %
                Total          $     3.1            $ 4.1      $ (1.0)         (24.4) %




  Total pack sales and associate fees for the three months ended June 30, 2022
decreased by $0.1 million, or 5.3%, to $1.8 million, as compared to $1.9 million
for the same period in 2021. The average value of packs and associate fees
decreased to $77 for the second quarter of 2022, as compared to $81 for the same
period in 2021. The total number of packs and associate fees sold decreased by
580, or 2.4%, to 23,268 for the three months ended June 30, 2022, as compared to
the same period in 2021.

Total pack sales and associate fees for the six months ended June 30, 2022
decreased by $1.0 million, or 24.4%, to $3.1 million, as compared to $4.1
million for the same period in 2021. The average value of packs and associate
fees decreased to $66 for the second quarter of 2022, as compared to $89 for the
same period in 2021. The total number of packs and associate fees sold increased
by 1,015, or 2.2%, to 46,998 for the six months ended June 30, 2022, as compared
to the same period in 2021.

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Pack sales and associate fees correlate to new associate positions held by
individuals in our network when a starter pack or associate fee is purchased and
to continuing associate positions held by individuals in our network when an
upgrade pack or renewal associate fee is purchased. However, there is no direct
correlation between product sales and the number of new and continuing associate
positions and preferred customer positions held by individuals in our network
because associates and preferred customers utilize products at different
volumes.


En 2021 et jusqu’en 2022, nous avons pris les mesures suivantes pour recruter et fidéliser des associés et des clients privilégiés :

•enregistré nos produits les plus populaires auprès des organismes de réglementation appropriés dans tous les pays d’exploitation ;

• déployé de nouveaux produits ;

•poursuite d’une campagne de marketing et d’éducation agressive ;

•continué de renforcer les initiatives de conformité ;

• concentré sur la publication des résultats d’études de recherche et d’essais cliniques liés à nos produits ;

•lancé des incitations supplémentaires ;

•continué d’explorer de nouveaux outils publicitaires et éducatifs pour accroître la notoriété du nom; et

• mis en œuvre des changements à notre plan de carrière et de rémunération des associés à l’échelle mondiale.


The approximate number of new and continuing active independent associates and
preferred customers who purchased our packs or products or paid associate fees
during the twelve months ended June 30, 2022 and 2021 were as follows:
                                          2022                       2021
                    New            81,000        53.3  %      86,000        48.9  %
                    Continuing     71,000        46.7  %      90,000        51.1  %
                    Total         152,000       100.0  %     176,000       100.0  %



Recruitment of new independent associates and preferred customers decreased by
7.9% to 19,823 in the second quarter of 2022 from 21,527 in the second quarter
of 2021.

Other Sales

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; (iii)
training and event registration fees; and (iv) a reserve for estimated sales
refunds and returns. Promotional materials, training, database applications and
business management tools support our independent associates, which in turn
helps stimulate product sales.

Pour chacun des trois mois terminés 30 juin 2022 et 2021, d’autres ventes ont été 0,2 million de dollars.

Pour les six mois terminés 30 juin 2022 et 2021, d’autres ventes ont été 0,5 million de dollars
et 0,4 million de dollarsrespectivement.

Bénéfice brut


For the three months ended June 30, 2022, gross profit decreased by $5.3
million, or 16.4%, to $27.1 million, as compared to $32.4 million for the same
period in 2021. For the three months ended June 30, 2022, gross profit as a
percentage of net sales increased to 77.4%, as compared to 76.2% for the same
period in 2021.

For the six months ended June 30, 2022, gross profit decreased by $11.1 million,
or 17.5%, to $52.3 million, as compared to $63.5 million for the same period in
2021. For the six months ended June 30, 2022, gross profit as a percentage of
net sales decreased to 77.7%, as compared to 78.5% for the same period in 2021.

Commissions et incitations


Commission expense for the three months ended June 30, 2022 decreased by 19.4%,
or $3.2 million, to $13.2 million, as compared to $16.4 million for the same
period in 2021. For the three months ended June 30, 2022, commissions as a
percentage of net sales decreased to 37.7% from 38.5% for the same period in
2021.

Commission expense for the six months ended June 30, 2022, decreased by 18.4%,
or $5.7 million, to $25.5 million, as compared to $31.2 million for the same
period in 2021. For the six months ended June 30, 2022, commissions as a
percentage of net sales decreased to 37.9% from 38.7% for the same period in
2021.

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Incentive costs for the three months ended June 30, 2022 increased to $0.9
million, as compared to $0.5 million for the same period in 2021. For the three
months ended June 30, 2022, incentives as a percentage of net sales increased to
2.7% from 1.3% for the same period in 2021.

Incentive costs for the six months ended June 30, 2022, increased to $1.7
million, as compared to $1.2 million for the same period in 2021. For the six
months ended June 30, 2022, incentives as a percentage of net sales increased to
2.6% from 1.5% for the same period in 2021.

Frais de vente et administratifs

Les frais de vente et d’administration comprennent une combinaison de frais fixes et variables. Ces dépenses comprennent la rémunération et les avantages sociaux des employés, la main-d’œuvre temporaire et contractuelle et les dépenses liées au marketing, telles que les coûts liés à l’organisation de nos événements parrainés par l’entreprise.


For the three months ended June 30, 2022, selling and administrative expenses
decreased by $0.7 million, or 8.7%, to $6.9 million, as compared to $7.6 million
for the same period in 2021. The decrease in selling and administrative expenses
consisted of a $0.4 million decrease in marketing costs, a $0.1 million decrease
in contract labor costs, a $0.1 million decrease in warehouse costs and a $0.1
million decrease in payroll costs. Selling and administrative expenses, as a
percentage of net sales, for the three months ended June 30, 2022 increased to
19.8% from 17.8% for the same period in 2021.

For the six months ended June 30, 2022, selling and administrative expenses
decreased by $0.9 million, or 5.9%, to $13.8 million as compared to $14.7
million for the same period in 2021. The decrease in selling and administrative
expenses consisted of a $0.5 million decrease in marketing costs, a $0.2 million
decrease in payroll costs, a $0.1 million decrease in contract labor costs and a
$0.1 million decrease in warehouse costs. Selling and administrative expenses,
as a percentage of net sales, for the six months ended June 30, 2022 increased
to 20.5% from 18.2% or the same period in 2021.

Autres frais de fonctionnement

Les autres coûts d’exploitation comprennent les frais comptables/juridiques/de conseil, les frais de déplacement et de représentation, les frais de traitement des cartes de crédit, les frais de stockage hors site, les services publics, les créances irrécouvrables et d’autres dépenses d’exploitation diverses.


For the three months ended June 30, 2022, other operating costs decreased by
$0.6 million, or 11.0%, to $4.9 million, as compared to $5.4 million for the
same period in 2021. For the three months ended June 30, 2022, other operating
costs as a percentage of net sales increased to 13.9% from 12.8% for the same
period in 2021. The decrease in operating costs was primarily due to a $0.2
million decrease in credit card fees, a $0.2 million decrease in bad debt
expense, a $0.1 million decrease in legal and consulting fees, and a $0.1
million decrease in other costs that are variable to revenue.

For the six months ended June 30, 2022, other operating costs decreased by $0.8
million, or 7.4%, to $9.8 million, as compared to $10.5 million for the same
period in 2021. For the six months ended June 30, 2022, other operating costs as
a percentage of net sales increased to 14.5% from 13.0% for the same period in
2021. The decrease in operating costs was primarily due to a $0.4 million
decrease in credit card fees, a $0.3 million decrease in legal and consulting
fees and a $0.1 million decrease in other costs that are variable to revenue.

Dotation aux amortissements

La dotation aux amortissements a été 0,3 million de dollars et 0,4 million de dollars pour les trois mois terminés 30 juin 2022 et 2021, respectivement.

La dotation aux amortissements a été 0,6 million de dollars et 1,0 million de dollars pour les six mois terminés 30 juin 2022 et 2021, respectivement.

Autres revenus (charges), nets

En raison des gains et des pertes de change, d’autres charges ont été 0,1 million de dollars pour les trois mois terminés 30 juin 2022. Pour les trois mois terminés 30 juin 2021les autres revenus étaient 0,2 million de dollars.

En raison des gains et des pertes de change, les autres revenus ont été 1 000 $ pour les six mois terminés 30 juin 2022. Pour les six mois terminés 30 juin 2021d’autres dépenses ont été 0,1 million de dollars.

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Income Tax (Provision) Benefit

  (Provision) benefit 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 three and six months ended June 30:

Country                2022        2021
Australia             30.0  %     30.0  %
Bermuda                  -  %        -  %
Canada                26.5  %     26.5  %
China(1)               2.5  %      5.0  %
Colombia(2)           35.0  %     31.0  %
Cyprus                12.5  %     12.5  %
Denmark               22.0  %     22.0  %
Gibraltar(3)          12.5  %     10.0  %
Hong Kong             16.5  %     16.5  %
Japan                 34.6  %     34.6  %
Mexico                30.0  %     30.0  %
Netherlands(4)        25.8  %        -  %
Norway                22.0  %     22.0  %
Republic of Korea     22.0  %     22.0  %
Russia(5)             20.0  %     20.0  %
Singapore             17.0  %     17.0  %
South Africa          28.0  %     28.0  %
Sweden                20.6  %     20.6  %
Switzerland(6)         9.2  %      9.2  %
Taiwan                20.0  %     20.0  %
Ukraine(7)            18.0  %     18.0  %
United Kingdom        19.0  %     19.0  %
United States(8)      22.2  %     23.8  %


(1)For 2021 and 2022, the Company qualifies for reduced tax rates of 5% and
2.5%, respectively, in China as a Small Low Profit Enterprise.
(2)On November 1, 2019, the Company suspended operations in Colombia, but
maintained the legal entity, Mannatech Colombia SAS. During the second quarter
of 2022, the Company liquidated the entity.
(3)For 2021, the Company will pay taxes at 10% for Gibraltar earnings until
August 1, 2021, and 12.5% from August 1, 2021 onward.
(4)On September 13, 2021, the Company established a legal entity in the
Netherlands called Mannatech Netherlands B.V.
(5)On August 1, 2016, the Company established a legal entity in Russia called
Mannatech RUS Ltd., but currently does not operate in Russia.
(6)On July 1, 2019, the Company suspended operations in Switzerland, but
maintains the legal entity.
(7)On March 21, 2014, the Company suspended operations in Ukraine, but maintains
the legal entity, Mannatech Ukraine LLC.
(8)Includes blended state effective rate of 1.2% for 2022 and 2.8% for 2021 in
addition to 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.

We use the recognition and measurement provisions of the FASB ASC Topic 740,
Income Taxes ("Topic 740"), to account for income taxes. The provisions of Topic
740 require a company to record a valuation allowance when the "more likely than
not" criterion for realizing net deferred tax assets cannot be met. Furthermore,
the weight given to the potential effect of such evidence should be commensurate
with the extent to which it can be objectively verified. As a result, we
reviewed the operating results, as well as all of the positive and negative
evidence related to realization of such deferred tax assets to evaluate the need
for a valuation allowance in each tax jurisdiction.

The provision for income taxes is directly related to our profitability and
changes in the taxable income among countries of operation. For the three and
six months ended June 30, 2022, the Company's effective tax rate was 12.4% and
10.7%, respectively. For the three and six months ended June 30, 2021, the
Company's effective tax rate was 2.2% and 8.1%, respectively.

The effective tax rates for the three and six months ended June 30, 2022 were
different from the federal statutory rate due primarily to the effect of changes
in valuation allowances recorded in certain jurisdictions and the foreign
derived intangible deduction in the US.

Le taux d’imposition effectif pour les trois mois terminés 30 juin 2021 était différent du taux statutaire fédéral en raison principalement de la répartition des bénéfices entre les juridictions et de la provision pour moins-value connexe enregistrée sur les pertes dans certaines juridictions.

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LIQUIDITY AND CAPITAL RESOURCES

Trésorerie et équivalents de trésorerie


As of June 30, 2022, our cash and cash equivalents decreased by 14.9%, or $3.6
million, to $20.6 million from $24.2 million as of December 31, 2021. 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) the Australia building lease
collateral. The current portion of restricted cash balances were $0.9 million at
each of June 30, 2022 and December 31, 2021. The long-term portion of restricted
cash balances were $0.5 million at each of June 30, 2022 and December 31, 2021.
Finally, fluctuations in currency rates produced a decrease of $2.8 million and
$1.3 million in cash and cash equivalents for the six months ended June 30, 2022
and 2021, respectively.

Our principal use of cash is to pay for operating expenses, including
commissions and incentives, capital assets, inventory purchases, and periodic
cash dividends. Business objectives, operations, and expansion of operations are
funded 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 June 30, 2022 and December 31, 2021, our working capital was $9.9 million and
$12.7 million, respectively.

Flux de trésorerie nets

Nos flux de trésorerie nets consolidés se composaient des éléments suivants, pour les six mois terminés 30 juin (en millions):

Provided by/(Used in):       2022        2021
Operating activities       $  1.5      $  8.3
Investing activities       $ (0.5)     $ (0.3)
Financing activities       $ (1.8)     $ (6.2)



Operating Activities

For the six months ending June 30, 2022, we operated the business for a small
profit. We collect cash and pay the related commission on orders shipped but not
yet received by customers, and this deferred revenue and other working capital
is a source of cash, which is offset by the cash we have invested in inventory
that is turning over slower in this economic environment. During the same period
in 2021, our primary source of cash was our profitable operations, which
provided $8.3 million cash flow.

Activités d’investissement


For the six months ended June 30, 2022 and 2021, we invested cash of $0.5
million and $0.3 million, respectively. During the six months ended June 30,
2022, we invested approximately $0.5 million in back-office software projects
reported as construction in progress. During the six months ended June 30, 2021,
we invested approximately $0.3 million in back-office software projects.

Activités de financement


For the six months ended June 30, 2022 and 2021, our financing activities used
cash of $1.8 million and $6.2 million, respectively. For the six months ended
June 30, 2022, we used $0.8 million in payments of dividends to shareholders,
$0.6 million in the repurchase of our company stock and $0.3 million in the
repayment of finance lease obligations. For the six months ended June 30, 2021,
we used $4.9 million in the repurchase of our company stock, $0.7 million in the
repayment of finance lease obligations and $0.7 million in payments of dividends
to shareholders.
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Liquidité générale et flux de trésorerie

Liquidité à court terme


We believe our existing liquidity and cash flows from operations are adequate to
fund our normal expected future business operations for the next 12 months. As
our primary source of liquidity is our cash flow from operations, this will be
dependent on our ability to maintain and increase revenue and/or continue to
reduce operational expenses. However, if our existing capital resources or cash
flows become insufficient to meet current business plans, projections, and
existing capital requirements, we may be required to raise additional funds,
which may not be available on favorable terms, if at all.

We are engaged in ongoing audits in various tax jurisdictions and other disputes
in the normal course of business. It is impossible at this time to predict
whether we will incur any liability, or to estimate the ranges of damages, if
any, in connection with these matters. Adverse outcomes on these uncertainties
may lead to substantial liability or enforcement actions that could adversely
affect our cash position. For more information, see Note 3, Income Taxes, and
Note 7, Litigation, to our consolidated financial statements.

We have contractual purchase commitments with certain raw materials suppliers to
purchase minimum quantities and to ensure exclusivity of our raw materials and
the proprietary nature of our products. At June 30, 2022, we have one supply
agreement that requires the Company to purchase an aggregate of $2.1 million
through 2022, with no purchase commitments thereafter. We expect to renegotiate
this agreement and if we fail to maintain exclusivity our business could be
adversely affected. We also maintain other supply agreements and manufacturing
agreements to protect our products, regulate product costs, and help ensure
quality control standards. These agreements do not require us to purchase any
minimum quantities. We have no present commitments or agreements with respect to
acquisitions or purchases of any manufacturing facilities; however, management
from time to time explores the possibility of the benefits of purchasing a raw
material manufacturing facility to help control the costs of our raw materials
and help ensure quality control standards.

We have operating lease liabilities for the property and equipment we use in our
business operations. These operating lease liabilities represent our minimum
future payment obligations on operating leases, including imputed interest. At
June 30, 2022, our operating lease liabilities were $6.2 million, of which $1.6
million was recorded in Accrued expenses and $4.6 million was recorded in Other
long-term liabilities. We also have finance lease liabilities of $0.1 million
and lease restoration liabilities of $0.3 million.

Nous avons des obligations de pension de 0,9 million de dollars liés à nos avantages sociaux à notre Japon filiale.


Responding to COVID-19, we have taken steps to protect the health, safety and
well-being of our customers, associates, employees, and communities by closing
some offices and equipping various staff members to work remotely. The Company
depends on an independent salesforce of distributors to market and sell its
products to consumers. Developments such as social distancing and
shelter-in-place directives have impacted their ability to engage with potential
and existing customers. The adverse economic effects of COVID-19 include
government restrictions and changes in consumer demand for the Company's
products. The Company has rescheduled corporate sponsored events, and in some
cases, our associates have canceled sales meetings.

Prolonged workforce disruptions, continued disruption in our supply chain or
potential decreases in consumer demands could negatively impact our sales as
well as the Company's liquidity in the fiscal year 2022; however, such impact is
currently unknown.

Long Term Liquidity

We believe our cash flows from operations should be adequate to fund our normal
expected future business operations. As our primary source of liquidity is from
our cash flows from operations, this will be dependent on our ability to
maintain 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.

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ARRANGEMENTS HORS BILAN

Nous n’avons pas d’arrangements d’entités ad hoc, ni d’arrangements hors bilan.

ESTIMATIONS COMPTABLES CRITIQUES


Our consolidated financial statements are prepared in accordance with GAAP. The
application of GAAP requires us to make estimates and assumptions that affect
the reported values of assets and liabilities at the date of our financial
statements, the reported amounts of revenues and expenses during the reporting
period, and the related disclosures of contingent assets and liabilities. 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 significant
accounting policies and critical 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 doubtful accounts, inventory
reserves, long-lived fixed assets and capitalization of internal-use software
development costs, reserve for uncertain income tax positions and tax valuation
allowances, revenue recognition, sales returns, and deferred revenues,
accounting for stock-based compensation, and contingencies and litigation.
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 significant accounting policies and critical estimates
as of June 30, 2022.

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 market. 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, seasonality factors, 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.

Immobilisations à long terme et capitalisation des coûts de développement de logiciels


In addition to capitalizing long lived fixed asset costs, we also capitalize
costs associated with internally-developed software projects (collectively
"fixed assets") and amortize such costs over the estimated useful lives of such
fixed assets. Fixed assets are carried at cost, less accumulated depreciation
computed using the straight-line method over the assets' estimated useful lives.
Leasehold improvements are amortized over the shorter of the remaining lease
terms or the estimated useful lives of the improvements. Expenditures for
maintenance and repairs are charged to operations as incurred. If a fixed asset
is sold or otherwise retired or disposed of, the cost of the fixed asset and the
related accumulated depreciation or amortization is written off and any
resulting gain or loss is recorded in other operating costs in our consolidated
statement of operations.

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We review our fixed assets for impairment whenever an event or change in
circumstances indicates the carrying amount of an asset or group of assets may
not be recoverable, such as plans to dispose of an asset before the end of its
previously estimated useful life. Our impairment review includes a comparison of
future projected cash flows generated by the asset, or group of assets, with its
associated net carrying value. If the net carrying value of the asset or group
of assets exceeds expected cash flows (undiscounted and without interest
charges), an impairment loss is recognized to the extent the carrying amount
exceeds the fair value. The fair value is determined by calculating the
discounted expected future cash flows using an estimated risk-free rate of
interest. Any identified impairment losses are recorded in the period in which
the impairment occurs. The carrying value of the fixed asset is adjusted to the
new carrying value, and any subsequent increases in fair value of the fixed
asset are not recorded. In addition, if we determine the estimated remaining
useful life of the asset should be reduced from our original estimate, the
periodic depreciation expense is adjusted prospectively, based on the new
remaining useful life of the fixed asset.

The impairment calculation requires us to apply judgment and estimates
concerning future cash flows, strategic plans, useful lives, and discount rates.
If actual results are not consistent with our estimates and assumptions, we may
be exposed to an additional impairment charge, which could be material to our
results of operations. In addition, if accounting standards change, or if fixed
assets become obsolete, we may be required to write off any unamortized costs of
fixed assets, or if estimated useful lives change, we would be required to
accelerate depreciation or amortization periods and recognize additional
depreciation expense in our consolidated statement of operations.

The net carrying costs of fixed assets are exposed to impairment losses if our
assumptions and estimates of their carrying values change, there is a change in
estimated future cash flow, or there is a change in the estimated useful life of
the fixed asset. Based on management's analysis, no impairment indicators
existed for the six months ended June 30, 2022 and the year ended December 31,
2021.

Positions fiscales incertaines et déductions pour évaluation fiscale


  As of June 30, 2022, there was nothing recorded in other long-term liabilities
on our consolidated balance sheet related to uncertain income tax positions. As
required by Topic 740, we use judgments and make estimates and assumptions
related to evaluating the probability of uncertain income tax positions. We base
our estimates and assumptions on the potential liability related to an
assessment of whether the income tax position will "more likely than not" be
sustained in an income tax audit. We are also subject to periodic audits from
multiple domestic and foreign tax authorities related to income tax and other
forms of taxation. These audits examine our tax positions, timing of income and
deductions, and allocation procedures across multiple jurisdictions. Depending
on the nature of the tax issue, we could be subject to audit over several years.
Therefore, our estimated reserve balances and liability related to uncertain
income tax positions may exist for multiple years before the applicable statute
of limitations expires or before an issue is resolved by the taxing authority.
Additionally, we may be requested to extend the statute of limitations for tax
years under audit. It is reasonably possible the tax jurisdiction may request
that the statute of limitations be extended, which may cause the classification
between current and long-term to change. We believe our tax liabilities related
to uncertain tax positions are based upon reasonable judgment and estimates;
however, if actual results materially differ, our effective income tax rate and
cash flows could be affected in the period of discovery or resolution. There are
ongoing income tax audits in various international jurisdictions that we believe
are not material to our financial statements.


Constatation des revenus et commissions différées


Our revenue is derived from sales of individual products, sales of starter and
renewal packs, associate fees and shipping fees. Substantially all of our
product and pack sales are to associates and preferred customers at published
wholesale prices. We record revenue net of any sales taxes and record a reserve
for expected sales returns based on historical experience. We recognize revenue
from shipped packs and products upon receipt by the customer.
Corporate-sponsored event revenue is recognized when the event is held.

Revenues from associate fees relate to providing associates with the rights to
earn commissions, benefits and incentives for an annual period. Associate fees
are recognized evenly over the course of the annual period of the associate's
contract. We 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, and the United Kingdom during the three and six
months ended June 30, 2022.

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The arrangement regarding associate fees has three service elements: (1)
providing new associates with the eligibility to earn commissions, benefits and
incentives for twelve months, (2) three months of complimentary access to
utilize the Success Tracker™ online tool, and (3) three months of complimentary
access to utilize the Mannatech+ customized electronic business-building tool.
Each of these service elements is provided over time to the customer. For the
three and six months ended June 30, 2022, the associate fees were allocated to
these three service elements on a relative standalone selling price basis in
accordance with ASC 606.

We defer certain components of revenue. At June 30, 2022 and December 31, 2021,
deferred revenue was $6.0 million and $4.9 million, respectively. When
participating in our loyalty program, customers earn loyalty points from
qualified automatic orders that can be applied to future purchases. We defer the
dollar equivalent in revenue of these points until the points are applied,
forfeited or expired, which includes an estimate of the percentage of the
unvested loyalty points that are expected to be forfeited or expired. The
deferred revenue associated with the loyalty program at each of June 30, 2022
and December 31, 2021 was $4.3 million. Deferred revenue consisted primarily of:
(i) sales of packs and products shipped but not received by the customers by the
end of the respective period; (ii) revenue from the loyalty program; and (iii)
prepaid registration fees from customers planning to attend a future
corporate-sponsored event. In total current assets, we defer commissions on (i)
the sales of packs and products ordered but not received by the customers by the
end of the respective period and (ii) the loyalty program. Deferred commissions
were $3.2 million and $2.4 million at June 30, 2022 and December 31, 2021,
respectively.

Loyalty program                                      (in thousands)

Revenus différés de fidélité au 1er janvier 2021 4 487 $
Points de fidélité perdus ou expirés

                        (3,987)
Loyalty points used                                        (9,809)
Loyalty points vested                                      11,676
Loyalty points unvested                                     1,925

Revenus différés de fidélité au 31 décembre 2021 4 292 $

Revenus différés de fidélité au 1 janvier 2022 4 292 $
Points de fidélité perdus ou expirés

                 (1,874)
Loyalty points used                                 (4,761)
Loyalty points vested                                5,681
Loyalty points unvested                                972

Revenus différés de fidélité au 30 juin 2022 4 310 $

Politique de retour de produit


We stand behind our packs and products and believe we offer a reasonable and
industry-standard product return policy to all of our customers. We do not
resell returned products. Refunds are not processed until proper approval is
obtained. All refunds must be processed and returned in the same form of payment
that was originally used in the sale. Each country in which we operate has
specific product return guidelines. However, we allow our associates and
preferred customers to exchange products as long as the products are unopened
and in good condition. Our return policies for our retail customers and our
associates and preferred customers are as follows:
•Retail Customer Product Return Policy. This policy allows a retail customer to
return any of our products to the original associate who sold the product and
receive a full cash refund from the associate for the first 180 days following
the product's purchase if located in the United States and Canada, and for the
first 90 days following the product's purchase in other countries where we sell
our products. The associate may then return or exchange the product based on the
associate product return policy.

•Associate and Preferred Customer Product Return Policy. This policy allows the
associate or preferred customer to return an order within one year of the
purchase date upon terminating his/her account. If an associate or preferred
customer returns a product unopened and in good condition, he/she may receive a
full refund minus a 10% restocking fee. We may also allow the associate or
preferred customer to receive a full satisfaction guarantee refund if they have
tried the product and are not satisfied for any reason, excluding promotional
materials. This satisfaction guarantee refund applies in the United States and
Canada, only for the first 180 days following the product's purchase, and
applies in other countries where we sell our products for the first 90 days
following the product's purchase; however, any commissions earned by an
associate will be deducted from the refund. If we discover abuse of the refund
policy, we may terminate the associate's or preferred customer's account.

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Historically, sales returns estimates have not materially deviated from actual
sales returns, as the majority of our customers who return merchandise do so
within the first 90 days after the original sale. Based upon our return policies
and historical experience, we estimate a sales return reserve for expected sales
refunds over a rolling six-month period. If actual results differ from our
estimated sales returns reserves due to various factors, the amount of revenue
recorded each period could be materially affected. Historically, our sales
returns have not materially changed through the years and have averaged 1.5% or
less of our gross sales.

Comptabilisation de la rémunération à base d’actions


We grant stock options to our employees, board members, and consultants. At the
date of grant, we determine the fair value of a stock option award and recognize
compensation expense over the requisite service period, or the vesting period of
such stock option award, which is two or three years. The fair value of the
stock option award is calculated using the Black-Scholes option-pricing model.
The Black-Scholes option-pricing model requires us to apply judgment and use
highly subjective assumptions, including expected stock option life, expected
volatility, expected average risk-free interest rates, and expected forfeiture
rates.

                                                        May 2022 Grant      June 2022 Grant
Estimated fair value per of options granted:           $       9.93        $         6.72
Assumptions:
Annualized dividend yield                                       2.6   %               3.9  %
Risk-free rate of return                                        2.9   %               3.4  %
Common stock price volatility                                  63.6   %              64.9  %
Expected average life of stock options (in years)               4.5                   4.5



   The assumptions we use are based on our best estimates and involve inherent
uncertainties related to market conditions that are outside of our control. If
actual results are not consistent with the assumptions we use, the stock-based
compensation expense reported in our consolidated financial statements may not
be representative of the actual economic cost of stock-based compensation. For
example, if actual employee forfeitures significantly differ from our estimated
forfeitures, we may be required to make an adjustment to our consolidated
financial statements in future periods.

If we grant additional stock options in the future, we would be required to
recognize additional compensation expense over the vesting period of such stock
options in our consolidated statement of operations. As of June 30, 2022, we had
126,276 shares available for grant in the future. During the six months ended
June 30, 2022, the Company granted 11,807 stock options.

Éventualités et litiges


Each quarter, we evaluate the need to establish a reserve for any legal claims
or assessments. We base our evaluation on our best estimates of the potential
liability in such matters. The legal reserve includes an estimated amount for
any damages and the probability of losing any threatened legal claims or
assessments. We consult with our general and outside counsel to determine the
legal reserve, which is based upon a combination of litigation and settlement
strategies. Although we believe that our legal reserve and accruals are based on
reasonable judgments and estimates, actual results could differ, which may
expose us to material gains or losses in future periods. If actual results
differ, if circumstances change, or if we experience an unanticipated adverse
outcome of any legal action, including any claim or assessment, we would be
required to recognize the estimated amount, which could reduce net income,
earnings per share, and cash flows.

On October 28, 2021, the Company received notice that it was among 1,100
companies scheduled to receive a letter from the Federal Trade Commission
("FTC") regarding "Notices of Penalty Offenses Concerning Money-Making
Opportunities and Endorsement and Testimonials." Mannatech received the letter
on October 28, 2021. The letters put companies on notice that they should be
aware of what constitutes false or misleading income, earning, or product
claims. As the FTC makes clear in the letter, receipt of the letter is not a
determination of wrongdoing. From a procedural standpoint, the FTC would still
have to file a formal action if they were to determine the Company is in
violation of the parameters laid out in the letter and then undergo an
administrative hearing process. 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.
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