Texas
|
75-2508900
|
|
(State or other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.)
|
600 S. Royal Lane, Suite 200, Coppell, Texas | 75019 | |
(Address of Principal Executive Offices) |
(Zip Code)
|
Large accelerated filer☐
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company☒
|
1
|
|||
Part I – FINANCIAL INFORMATION
|
|||
Item 1.
|
2
|
||
2
|
|||
3
|
|||
3
|
|||
4
|
|||
5
|
|||
6
|
|||
Item 2.
|
16
|
||
16
|
|||
17
|
|||
2
3
|
|||
2
5
|
|||
29
|
|||
Item 3.
|
29
|
||
Item 4.
|
3
0
|
||
Part II – OTHER INFORMATION | |||
Item 1.
|
31
|
||
Item 1A.
|
31
|
||
Item 2.
|
31
|
||
Item 3.
|
31
|
||
Item 4.
|
31
|
||
Item 5.
|
31
|
||
Item 6.
|
31
|
||
32
|
§ | management’s plans and objectives for future operations; |
§ | existing cash flows being adequate to fund future operational needs; |
§ | future plans related to budgets, future capital requirements, market share growth, and anticipated capital projects and obligations; |
§ | the realization of net deferred tax assets; |
§ | the ability to curtail operating expenditures; |
§ | global statutory tax rates remaining unchanged; |
§ | the impact of future market changes due to exposure to foreign currency translations; |
§ | the possibility of certain policies, procedures, and internal processes minimizing exposure to market risk; |
§ | the impact of new accounting pronouncements on financial condition, results of operations, or cash flows; |
§ | the outcome of new or existing litigation matters; |
§ | the outcome of new or existing regulatory inquiries or investigations; and |
§ | other assumptions described in this report underlying such forward-looking statements. |
§ | overall growth or lack of growth in the nutritional supplements industry; |
§ | plans for expected future product development; |
§ | changes in manufacturing costs; |
§ | shifts in the mix of packs and products; |
§ | the future impact of any changes to global associate career and compensation plans or incentives; |
§ | the ability to attract and retain independent associates and members; |
§ | new regulatory changes that may affect operations or products; |
§ | the competitive nature of our business with respect to products and pricing; |
§ | publicity related to our products or network-marketing; and |
§ | the political, social, and economic climate. |
ASSETS
|
March 31,
2015
(unaudited)
|
December 31,
2014
|
||||||
Cash and cash equivalents
|
$
|
28,399
|
$
|
27,999
|
||||
Restricted cash
|
1,512
|
1,511
|
||||||
Accounts receivable, net of allowance of $215 and $213 in 2015 and 2014, respectively
|
378
|
504
|
||||||
Income tax receivable
|
10
|
4
|
||||||
Inventories, net
|
13,484
|
10,591
|
||||||
Prepaid expenses and other current assets
|
2,679
|
3,069
|
||||||
Deferred commissions
|
4,476
|
4,544
|
||||||
Deferred tax assets, net
|
926
|
1,141
|
||||||
Total current assets
|
51,864
|
49,363
|
||||||
Property and equipment, net
|
3,375
|
2,481
|
||||||
Construction in progress
|
1,299
|
1,622
|
||||||
Long-term restricted cash
|
6,984
|
7,045
|
||||||
Other assets
|
4,081
|
3,567
|
||||||
Long-term deferred tax assets, net
|
3,553
|
3,320
|
||||||
Total assets
|
$
|
71,156
|
$
|
67,398
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current portion of capital leases
|
$
|
1,257
|
$
|
901
|
||||
Accounts payable
|
7,375
|
4,252
|
||||||
Accrued expenses
|
6,001
|
6,356
|
||||||
Commissions and incentives payable
|
6,540
|
7,908
|
||||||
Taxes payable
|
2,074
|
2,578
|
||||||
Current deferred tax liability
|
147
|
123
|
||||||
Deferred revenue
|
11,387
|
10,890
|
||||||
Total current liabilities
|
34,781
|
33,008
|
||||||
Capital leases, excluding current portion
|
1,343
|
852
|
||||||
Long-term deferred tax liabilities
|
1
|
26
|
||||||
Other long-term liabilities
|
2,137
|
2,136
|
||||||
Total liabilities
|
38,262
|
36,022
|
||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding
|
—
|
—
|
||||||
Common stock, $0.0001 par value, 99,000,000 shares authorized, 2,773,972 shares issued and 2,679,411 shares outstanding as of March 31, 2015 and 2,773,972 shares issued and 2,676,077 shares outstanding as of December 31, 2014
|
—
|
—
|
||||||
Additional paid-in capital
|
40,442
|
40,672
|
||||||
Accumulated earnings
|
3,849
|
2,750
|
||||||
Accumulated other comprehensive income (loss)
|
133
|
(109
|
)
|
|||||
Less treasury stock, at average cost, 94,561 and 97,895 shares in 2015 and 2014, respectively
|
(11,530
|
)
|
(11,937
|
)
|
||||
Total shareholders’ equity
|
32,894
|
31,376
|
||||||
Total liabilities and shareholders’ equity
|
$
|
71,156
|
$
|
67,398
|
Three months ended
March 31,
|
||||||||
2015
|
2014
|
|||||||
Net sales
|
$
|
44,370
|
$
|
42,963
|
||||
Cost of sales
|
8,553
|
9,398
|
||||||
Gross profit
|
35,817
|
33,565
|
||||||
Operating expenses:
|
||||||||
Commissions and incentives
|
17,542
|
16,968
|
||||||
Selling and administrative expenses
|
8,813
|
7,876
|
||||||
Depreciation and amortization
|
396
|
386
|
||||||
Other operating costs
|
6,555
|
6,956
|
||||||
Total operating expenses
|
33,306
|
32,186
|
||||||
Income from operations
|
2,511
|
1,379
|
||||||
Interest income
|
30
|
1
|
||||||
Other expense, net
|
(932
|
)
|
(336
|
)
|
||||
Income before income taxes
|
1,609
|
1,044
|
||||||
Provision for income taxes
|
510
|
816
|
||||||
Net income
|
$
|
1,099
|
$
|
228
|
||||
Earnings per common share:
|
||||||||
Basic
|
$
|
0.41
|
$
|
0.09
|
||||
Diluted
|
$
|
0.40
|
$
|
0.08
|
||||
Weighted-average common shares outstanding:
|
||||||||
Basic
|
2,677
|
2,654
|
||||||
Diluted
|
2,730
|
2,702
|
Three months ended
March 31,
|
||||||||
2015
|
2014
|
|||||||
Net income
|
$
|
1,099
|
$
|
228
|
||||
Foreign currency translations
|
242
|
63
|
||||||
Comprehensive income
|
$
|
1,341
|
$
|
291
|
Common stock
Par value
|
Additional
paid in
capital
|
Accumulated
earnings
|
Accumulated
other
comprehensive
income (loss)
|
Treasury
stock
|
Total
shareholders’
equity
|
|||||||||||||||||||
Balance at December 31, 2014
|
$
|
—
|
$
|
40,672
|
$
|
2,750
|
$
|
(109
|
)
|
$
|
(11,937
|
)
|
$
|
31,376
|
||||||||||
Net income
|
—
|
—
|
1,099
|
—
|
—
|
1,099
|
||||||||||||||||||
Charge related to stock-based compensation
|
—
|
141
|
—
|
—
|
—
|
141
|
||||||||||||||||||
Stock option exercises
|
—
|
(387
|
)
|
—
|
—
|
407
|
20
|
|||||||||||||||||
Tax benefit from exercise of stock options
|
—
|
16
|
—
|
—
|
—
|
16
|
||||||||||||||||||
Foreign currency translations
|
—
|
—
|
—
|
242
|
—
|
242
|
||||||||||||||||||
Balance at March 31, 2015
|
$
|
—
|
$
|
40,442
|
$
|
3,849
|
$
|
133
|
$
|
(11,530
|
)
|
$
|
32,894
|
Three months ended
March 31,
|
||||||||
2015
|
2014
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
1,099
|
$
|
228
|
||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities
:
|
||||||||
Depreciation and amortization
|
396
|
386
|
||||||
Provision for inventory losses
|
196
|
851
|
||||||
Provision for doubtful accounts
|
128
|
166
|
||||||
Loss on disposal of assets
|
7
|
37
|
||||||
Accounting charge related to stock-based compensation expense
|
141
|
178
|
||||||
Tax benefit from exercise of stock options
|
(16
|
)
|
--
|
|||||
Deferred income taxes
|
(1
|
)
|
209
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(26
|
)
|
67
|
|||||
Income tax receivable
|
(6
|
)
|
(6
|
)
|
||||
Inventories
|
(3,124
|
)
|
(895
|
)
|
||||
Prepaid expenses and other current assets
|
962
|
(378
|
)
|
|||||
Deferred commissions
|
58
|
(1,398
|
)
|
|||||
Other assets
|
(83
|
)
|
512
|
|||||
Accounts payable
|
3,126
|
346
|
||||||
Accrued expenses and other liabilities
|
(334
|
)
|
220
|
|||||
Taxes payable
|
(527
|
)
|
(390
|
)
|
||||
Commissions and incentives payable
|
(1,347
|
)
|
(3,574
|
)
|
||||
Deferred revenue
|
516
|
3,359
|
||||||
Change in restricted cash
|
9
|
(11
|
)
|
|||||
Net cash provided by (used in) operating activities
|
1,174
|
(93
|
)
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Acquisition of property and equipment
|
(787
|
)
|
(123
|
)
|
||||
Net cash used in investing activities
|
(787
|
)
|
(123
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from stock options exercised
|
20
|
—
|
||||||
Tax benefit from exercise of stock options
|
16
|
—
|
||||||
Repayment of capital lease obligations
|
(369
|
)
|
(266
|
)
|
||||
Net cash used in financing activities
|
(333
|
)
|
(266
|
)
|
||||
Effect of currency exchange rate changes on cash and cash equivalents
|
346
|
262
|
||||||
Net increase (decrease) in cash and cash equivalents
|
400
|
(220
|
)
|
|||||
Cash and cash equivalents at the beginning of the period
|
27,999
|
20,395
|
||||||
Cash and cash equivalents at the end of the period
|
$
|
28,399
|
$
|
20,175
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Income taxes paid, net
|
$
|
3,245
|
$
|
851
|
||||
Interest paid on capital leases
|
$
|
24
|
$
|
22
|
||||
Assets acquired through capital leases
|
$
|
1,271
|
$
|
668
|
NOTE 1: | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Loyalty program
|
(in thousands)
|
|||
Loyalty deferred revenue as of January 1, 2014
|
$
|
5,456
|
||
Loyalty points forfeited
|
(4,664
|
)
|
||
Loyalty points used
|
(12,348
|
)
|
||
Loyalty points vested
|
19,580
|
|||
Loyalty points unvested
|
1,679
|
|||
Loyalty deferred revenue as of December 31, 2014
|
$
|
9,703
|
Loyalty deferred revenue as of January 1, 2015
|
$
|
9,703
|
||
Loyalty points forfeited
|
(1,381
|
)
|
||
Loyalty points used
|
(3,592
|
)
|
||
Loyalty points vested
|
3,144
|
|||
Loyalty points unvested
|
1,846
|
|||
Loyalty deferred revenue as of March 31, 2015
|
$
|
9,720
|
Sales reserve as of January 1, 2015
|
$
|
207
|
||
Provision related to sales made in current period
|
510
|
|||
Adjustment related to sales made in prior periods
|
(43
|
)
|
||
Actual returns or credits related to current period
|
(276
|
)
|
||
Actual returns or credits related to prior periods
|
(158
|
)
|
||
Sales reserve as of March 31, 2015
|
$
|
240
|
NOTE 2: | INVENTORIES |
March 31, 2015
|
December 31, 2014
|
|||||||
Raw materials
|
$
|
1,820
|
$
|
2,118
|
||||
Finished goods
|
13,597
|
10,615
|
||||||
Inventory reserves for obsolescence
|
(1,933
|
)
|
(2,142
|
)
|
||||
Total
|
$
|
13,484
|
$
|
10,591
|
NOTE 3: | INCOME TAXES |
NOTE 4: | EARNINGS PER SHARE |
NOTE 5: | STOCK-BASED COMPENSATION |
Three months ending
March 31,
|
||||||||
2015
|
2014
|
|||||||
Total gross compensation expense
|
$
|
141
|
$
|
178
|
||||
Total tax benefit associated with compensation expense
|
31
|
60
|
||||||
Total net compensation expense
|
$
|
110
|
$
|
118
|
Nine months
ending
December 31,
|
Year ending December 31,
|
|||||||||||||||
2015
|
2016
|
2017
|
2018
|
|||||||||||||
Total gross unrecognized compensation expense
|
$
|
278
|
$
|
215
|
$
|
63
|
$
|
6
|
||||||||
Tax benefit associated with unrecognized compensation expense
|
50
|
14
|
—
|
—
|
||||||||||||
Total net unrecognized compensation expense
|
$
|
228
|
$
|
201
|
$
|
63
|
$
|
6
|
NOTE 6: | SHAREHOLDERS’ EQUITY |
Foreign
Currency
Translation
|
Pension
Postretirement
Benefit
Obligation
|
Accumulated
Other
Comprehensive Income
(Loss), Net
|
||||||||||
Balance as of December 31, 2014
|
$
|
(457
|
)
|
$
|
348
|
$
|
(109
|
)
|
||||
Current-period change
1
|
242
|
—
|
242
|
|||||||||
Balance as of March 31, 2015
|
$
|
(215
|
)
|
$
|
348
|
$
|
133
|
1
|
No amounts reclassified from accumulated other comprehensive income (loss)
|
NOTE 7: | LITIGATION |
NOTE 8: |
FAIR VALUE
|
· | Level 1 – Quoted unadjusted prices for identical instruments in active markets. |
· | Level 2 – Quoted 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 3 – Model-derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by the Company. |
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||
Money Market Funds – Fidelity, US
|
$
|
207
|
$
|
—
|
$
|
—
|
$
|
207
|
||||||||
Interest bearing deposits – various banks
|
15,761
|
—
|
—
|
15,761
|
||||||||||||
Total assets
|
$
|
15,968
|
$
|
—
|
$
|
—
|
$
|
15,968
|
||||||||
Amounts included in:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
9,464
|
$
|
—
|
$
|
—
|
$
|
9,464
|
||||||||
Restricted cash
|
6,504
|
—
|
—
|
6,504
|
||||||||||||
Total
|
$
|
15,968
|
$
|
—
|
$
|
—
|
$
|
15,968
|
NOTE 9: | SEGMENT INFORMATION |
Three months ended March 31
|
||||||||||||||||
Region
|
2015
|
2014
|
||||||||||||||
North America
|
$
|
18.1
|
40.8
|
%
|
$
|
20.3
|
47.2
|
%
|
||||||||
Asia/Pacific
|
22.7
|
51.1
|
%
|
19.0
|
44.2
|
%
|
||||||||||
EMEA
|
3.6
|
8.1
|
%
|
3.7
|
8.6
|
%
|
||||||||||
Total
|
$
|
44.4
|
100.0
|
%
|
$
|
43.0
|
100.0
|
%
|
Three months ended March 31
|
||||||||
2015
|
2014
|
|||||||
Consolidated product sales
|
$
|
34.2
|
$
|
34.5
|
||||
Consolidated pack sales
|
8.9
|
6.7
|
||||||
Consolidated other, including freight
|
1.3
|
1.8
|
||||||
Total
|
$
|
44.4
|
$
|
43.0
|
Region
|
March 31,
2015
|
December 31,
2014
|
||||||
North America
|
$
|
3.6
|
$
|
3.1
|
||||
Asia/Pacific
|
1.0
|
0.8
|
||||||
EMEA
|
0.1
|
0.2
|
||||||
Total
|
$
|
4.7
|
$
|
4.1
|
Region
|
March 31,
2015
|
December 31,
2014
|
||||||
North America
|
$
|
5.1
|
$
|
4.0
|
||||
Asia/Pacific
|
5.4
|
4.3
|
||||||
EMEA
|
3.0
|
2.3
|
||||||
Total
|
$
|
13.5
|
$
|
10.6
|
NOTE 10: | RECENT ACCOUNTING PRONOUNCEMENTS |
· | During the three months ended March 31, 2015, net sales in Asia Pacific and EMEA attributable to U th skin care products were $0.7 million. U th skin care products were not sold in Asia Pacific or EMEA during the three months ended March 31, 2014. |
· | The loyalty program increased first quarter 2015 net sales by $2.2 million, as compared to the same period in 2014. |
2015
|
2014
|
Change
|
||||||||||||||||||||||
Total
Dollars
|
% of
net sales
|
Total
dollars
|
% of
net sales
|
Dollar
|
Percentage
|
|||||||||||||||||||
Net sales
|
$
|
44,370
|
100.0
|
%
|
$
|
42,963
|
100.0
|
%
|
$
|
1,407
|
3.3
|
%
|
||||||||||||
Cost of sales
|
8,553
|
19.3
|
%
|
9,398
|
21.9
|
%
|
(845
|
)
|
(9.0
|
)%
|
||||||||||||||
Gross profit
|
35,817
|
80.7
|
%
|
33,565
|
78.1
|
%
|
2,252
|
6.7
|
%
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
Commissions and incentives
|
17,542
|
39.5
|
%
|
16,968
|
39.5
|
%
|
574
|
3.4
|
%
|
|||||||||||||||
Selling and administrative expenses
|
8,813
|
19.9
|
%
|
7,876
|
18.3
|
%
|
937
|
11.9
|
%
|
|||||||||||||||
Depreciation and amortization
|
396
|
0.9
|
%
|
386
|
0.9
|
%
|
10
|
2.6
|
%
|
|||||||||||||||
Other operating costs
|
6,555
|
14.8
|
%
|
6,956
|
16.2
|
%
|
(401
|
)
|
(5.8
|
)%
|
||||||||||||||
Total operating expenses
|
33,306
|
75.1
|
%
|
32,186
|
74.9
|
%
|
1,120
|
3.5
|
%
|
|||||||||||||||
Income from operations
|
2,511
|
5.7
|
%
|
1,379
|
3.2
|
%
|
1,132
|
82.0
|
%
|
|||||||||||||||
Interest income
|
30
|
0.1
|
%
|
1
|
0.0
|
%
|
29
|
2,900.0
|
%
|
|||||||||||||||
Other expense, net
|
(932
|
)
|
(2.1
|
)%
|
(336
|
)
|
(0.8
|
)%
|
(596
|
)
|
(177.4
|
)%
|
||||||||||||
Income before income taxes
|
1,609
|
3.6
|
%
|
1,044
|
2.4
|
%
|
565
|
54.1
|
%
|
|||||||||||||||
Income tax provision
|
510
|
1.1
|
%
|
816
|
1.9
|
%
|
(306
|
)
|
(37.5
|
)%
|
||||||||||||||
Net income
|
$
|
1,099
|
2.5
|
%
|
$
|
228
|
0.5
|
%
|
$
|
871
|
382.0
|
%
|
Three months ended
March 31, 2015
|
Three months ended
March 31, 2014
|
Reconciliation –
Constant $
|
||||||||||||||||||
GAAP
Measure:
Total $
|
Non-GAAP
Measure:
Constant $
|
GAAP
Measure:
Total $
|
Dollar
|
Percent
|
||||||||||||||||
Net sales
|
$
|
44.4
|
$
|
46.2
|
$
|
43.0
|
$
|
3.2
|
7.4
|
%
|
||||||||||
Product
|
34.2
|
35.6
|
34.5
|
1.1
|
3.2
|
%
|
||||||||||||||
Pack
|
8.9
|
9.2
|
6.7
|
2.5
|
37.3
|
%
|
||||||||||||||
Other
|
1.3
|
1.4
|
1.8
|
(0.4
|
)
|
(22.2
|
)%
|
|||||||||||||
Deferred revenue
|
11.3
|
11.9
|
9.7
|
2.2
|
22.7
|
%
|
||||||||||||||
Gross profit
|
35.8
|
37.1
|
33.6
|
3.5
|
10.4
|
%
|
||||||||||||||
Income from operations
|
2.5
|
2.6
|
1.4
|
1.2
|
85.7
|
%
|
Three months ended
March 31, 2015
|
Three months ended
March 31, 2014
|
|||||||||||||||
North America
|
$
|
18.1
|
40.8
|
%
|
$
|
20.3
|
47.2
|
%
|
||||||||
Asia/Pacific
|
22.7
|
51.1
|
%
|
19.0
|
44.2
|
%
|
||||||||||
EMEA
|
3.6
|
8.1
|
%
|
3.7
|
8.6
|
%
|
||||||||||
Total
|
$
|
44.4
|
100.0
|
%
|
$
|
43.0
|
100.0
|
%
|
• | changes in our sales prices; |
• | changes in consumer demand; |
• | changes in the number of independent associates and members; |
• | changes in competitors’ products; |
• | changes in economic conditions; |
• | changes in regulations; |
• | announcements of new scientific studies and breakthroughs; |
• | introduction of new products; |
• | discontinuation of existing products; |
• | adverse publicity; |
• | changes in our commissions and incentives programs; |
• | direct competition; and |
• | fluctuations in foreign currency exchange rates. |
Change
|
||||||||||||||||
2015
|
2014
|
Dollar
|
Percentage
|
|||||||||||||
Consolidated product sales
|
$
|
34.2
|
$
|
34.5
|
$
|
(0.3
|
)
|
(0.9
|
)%
|
|||||||
Consolidated pack sales
|
8.9
|
6.7
|
2.2
|
32.8
|
%
|
|||||||||||
Consolidated other, including freight
|
1.3
|
1.8
|
(0.5
|
)
|
(27.8
|
)%
|
||||||||||
Total consolidated net sales
|
$
|
44.4
|
$
|
43.0
|
$
|
1.4
|
3.3
|
%
|
Three months ended March 31
|
Change
|
|||||||||||||||
2015
|
2014
|
Dollar
|
Percentage
|
|||||||||||||
New
|
$
|
2.0
|
$
|
2.2
|
$
|
(0.2
|
)
|
(9.1
|
)%
|
|||||||
Continuing
|
6.9
|
4.5
|
2.4
|
53.3
|
%
|
|||||||||||
Total
|
$
|
8.9
|
$
|
6.7
|
$
|
2.2
|
32.8
|
%
|
• | explored new international markets; |
• | launched an aggressive marketing and educational campaign; |
• | continued to strengthen compliance initiatives; |
• | concentrated on publishing results of research studies and clinical trials related to our products; |
• | initiated additional incentives; |
• | explored new advertising and educational tools to broaden name recognition; and |
• | implemented changes to our global associate career and compensation plan. |
2015
|
2014
|
|||||||||||||||
New
|
108,000
|
47.0
|
%
|
118,000
|
48.0
|
%
|
||||||||||
Continuing
|
122,000
|
53.0
|
%
|
128,000
|
52.0
|
%
|
||||||||||
Total Active
|
230,000
|
100.0
|
%
|
246,000
|
100.0
|
%
|
Country
|
2015
|
2014
|
||||||
Australia
|
30.0
|
%
|
30.0
|
%
|
||||
Canada
|
26.5
|
%
|
26.5
|
%
|
||||
Denmark
|
23.5
|
%
|
23.5
|
%
|
||||
Japan
|
37.1
|
%
|
37.1
|
%
|
||||
Mexico
|
30.0
|
%
|
30.0
|
%
|
||||
Norway
|
27.0
|
%
|
27.0
|
%
|
||||
Republic of Korea
|
22.0
|
%
|
22.0
|
%
|
||||
Singapore
|
17.0
|
%
|
17.0
|
%
|
||||
South Africa
|
28.0
|
%
|
28.0
|
%
|
||||
Sweden
|
22.0
|
%
|
22.0
|
%
|
||||
Switzerland
|
16.2
|
%
|
16.2
|
%
|
||||
Taiwan
|
17.0
|
%
|
17.0
|
%
|
||||
United Kingdom
|
20.0
|
%
|
21.0
|
%
|
||||
United States
|
37.5
|
%
|
37.5
|
%
|
||||
Cyprus
|
12.5
|
%
|
12.5
|
%
|
||||
Hong Kong
|
16.5
|
%
|
16.5
|
%
|
||||
Ukraine
|
18.0
|
%
|
18.0
|
%
|
||||
Gibraltar
|
10.0
|
%
|
10.0
|
%
|
Country
|
2015
|
2014
|
||||||
Mexico
|
$
|
2.7
|
$
|
2.7
|
||||
Norway
|
0.1
|
0.1
|
||||||
Sweden
|
0.1
|
0.1
|
||||||
Switzerland
|
1.0
|
1.2
|
||||||
Taiwan
|
1.2
|
1.2
|
||||||
Ukraine
|
0.1
|
0.1
|
||||||
United States
|
4.4
|
4.3
|
||||||
Total
|
$
|
9.6
|
$
|
9.7
|
Provided by / (used in):
|
2015
|
2014
|
||||||
Operating activities
|
$
|
1.2
|
$
|
(0.1
|
)
|
|||
Investing activities
|
$
|
(0.8
|
)
|
$
|
(0.1
|
)
|
||
Financing activities
|
$
|
(0.3
|
)
|
$
|
(0.3
|
)
|
Commitments and obligations
|
Remaining
2015
|
2016
|
2017
|
2018
|
2019
|
Thereafter
|
Total
|
|||||||||||||||||||||
Financing arrangements
(1)
|
$
|
1,118
|
$
|
767
|
$
|
611
|
$
|
239
|
$
|
45
|
$
|
11
|
$
|
2,791
|
||||||||||||||
Purchase obligations
(2)(3)
|
5,361
|
288
|
—
|
—
|
—
|
—
|
5,649
|
|||||||||||||||||||||
Operating leases
|
1,427
|
1,606
|
1,327
|
680
|
173
|
158
|
5,371
|
|||||||||||||||||||||
Post-employment royalty
|
10
|
—
|
—
|
—
|
—
|
—
|
10
|
|||||||||||||||||||||
Employment agreements
|
896
|
299
|
—
|
—
|
—
|
—
|
1,195
|
|||||||||||||||||||||
Royalty agreement
|
45
|
—
|
—
|
—
|
—
|
—
|
45
|
|||||||||||||||||||||
Tax liability
(4)
|
34
|
266
|
485
|
—
|
—
|
—
|
785
|
|||||||||||||||||||||
Other obligations
(5)
|
204
|
252
|
129
|
54
|
50
|
695
|
1,384
|
|||||||||||||||||||||
Total
|
$
|
9,095
|
$
|
3,478
|
$
|
2,552
|
$
|
973
|
$
|
268
|
$
|
864
|
$
|
17,230
|
(1) | Includes capital lease obligations. |
(2) | For purposes of the table, a purchase obligation is defined as an agreement to purchase goods or services that is non-cancelable, enforceable and legally binding on the Company that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. |
(3) | Excludes approximately $10.3 million of finished product purchase orders that may be cancelled or with delivery dates that have changed as of March 31, 2015. |
(4) | Represents the tax liability associated with uncertain tax positions. |
(5) | Other obligations are composed of pension obligations related to the Company's international operations (approximately $1.0 million) and lease restoration obligations (approximately $0.4 million). |
Estimated useful life
|
Net carrying value at
March 31, 2015
|
|||
Office furniture and equipment
|
5 to 7 years
|
$
|
0.6 million
|
|
Computer hardware and software
|
3 to 5 years
|
1.6 million
|
||
Automobiles
|
3 to 5 years
|
—
million
|
||
Leasehold improvements
|
2 to 10 years
(1)
|
1.2 million
|
||
Total net carrying value at March 31, 2015
|
$
|
3.4 million
|
(1)
|
We amortize leasehold improvements over the shorter of the useful estimated life of the leased asset or the lease term.
|
Loyalty program
|
(in thousands)
|
|||
Loyalty deferred revenue as of January 1, 2014
|
$
|
5,456
|
||
Loyalty points forfeited
|
(4,664
|
)
|
||
Loyalty points used
|
(12,348
|
)
|
||
Loyalty points vested
|
19,580
|
|||
Loyalty points unvested
|
1,679
|
|||
Loyalty deferred revenue as of December 31, 2014
|
$
|
9,703
|
Loyalty deferred revenue as of January 1, 2015
|
$
|
9,703
|
||
Loyalty points forfeited
|
(1,381
|
)
|
||
Loyalty points used
|
(3,592
|
)
|
||
Loyalty points vested
|
3,144
|
|||
Loyalty points unvested
|
1,846
|
|||
Loyalty deferred revenue as of March 31, 2015
|
$
|
9,720
|
· | 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 the remaining countries. The associate may then return or exchange the product based on the associate product return policy. |
· | Associate and Member Product Return Policy. This policy allows the associate or member to return an order within one year of the purchase date upon terminating his/her account. If an associate or member 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 member 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 the remaining countries 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 member’s account. |
Three months ended March 31, 2015
|
As of
March 31, 2015
|
|||||||||||||||
Country (foreign currency name)
|
Low
|
High
|
Average
|
Spot
|
||||||||||||
Australia (Australian Dollar)
|
0.76084
|
0.82330
|
0.78788
|
0.76909
|
||||||||||||
Various countries
(1)
(Euro)
|
1.04993
|
1.21430
|
1.12865
|
1.08517
|
||||||||||||
Canada (Canadian Dollar)
|
0.78230
|
0.86220
|
0.80808
|
0.79103
|
||||||||||||
Czech Republic (Koruna)
|
0.03840
|
0.04380
|
0.04088
|
0.03950
|
||||||||||||
Denmark (Kroner)
|
0.14069
|
0.16310
|
0.15160
|
0.14530
|
||||||||||||
Hong Kong (Hong Kong Dollar)
|
0.12875
|
0.12900
|
0.12895
|
0.12896
|
||||||||||||
Japan (Yen)
|
0.00823
|
0.00857
|
0.00839
|
0.00836
|
||||||||||||
Mexico (Peso)
|
0.06419
|
0.06885
|
0.06694
|
0.06565
|
||||||||||||
New Zealand (New Zealand Dollar)
|
0.72479
|
0.78430
|
0.75313
|
0.75293
|
||||||||||||
Norway (Krone)
|
0.12034
|
0.13460
|
0.12930
|
0.12515
|
||||||||||||
Republic of Korea (Won)
|
0.00088
|
0.00093
|
0.00091
|
0.00091
|
||||||||||||
Singapore (Singapore Dollar)
|
0.71835
|
0.75650
|
0.73789
|
0.72792
|
||||||||||||
South Africa (Rand)
|
0.08021
|
0.08805
|
0.08528
|
0.08276
|
||||||||||||
Sweden (Krona)
|
0.11471
|
0.12900
|
0.12028
|
0.11633
|
||||||||||||
Switzerland (Franc)
|
0.98100
|
1.17090
|
1.05205
|
1.03722
|
||||||||||||
Taiwan (New Taiwan Dollar)
|
0.03122
|
0.03212
|
0.03168
|
0.03205
|
||||||||||||
United Kingdom (British Pound)
|
1.47478
|
1.55780
|
1.51613
|
1.48363
|
(1)
|
Austria, Germany, the Netherlands, Estonia, Finland, the Republic of Ireland and Spain
|
Item 5. | Other Information |
MANNATECH, INCORPORATED
|
|||
Dated: May 12, 2015
|
By:
|
/s/ Robert A. Sinnott
|
|
Robert A. Sinnott
|
|||
Chief Executive Officer and Chief Science Officer
|
|||
(principal executive officer)
|
Dated: May 12, 2015
|
By:
|
/s/ S. Mark Nicholls
|
|
S. Mark Nicholls
|
|||
Chief Financial Officer
|
|||
(principal financial officer)
|
Incorporated by Reference
|
|||||
Exhibit
Number
|
Exhibit Description
|
Form
|
File No.
|
Exhibit(s)
|
Filing Date
|
3.1
|
Amended and Restated Articles of Incorporation of Mannatech, dated May 19, 1998.
|
S-1
|
333-63133
|
3.1
|
October 28, 1998
|
3.2
|
Certificate of Amendment to the Amended and Restated Articles of Incorporation of Mannatech, dated January 13, 2012.
|
8-K
|
000-24657
|
3.1
|
January 17, 2012
|
3.3
|
Fourth Amended and Restated Bylaws of Mannatech, dated August 8, 2001 (Corrected).
|
10-K
|
000-24657
|
3.2
|
March 16, 2007
|
3.4
|
First Amendment to the Fourth Amended and Restated Bylaws of Mannatech, effective November 30, 2007.
|
8-K
|
000-24657
|
3.1
|
December 6, 2007
|
4.1
|
Specimen Certificate representing Mannatech’s common stock, par value $0.0001 per share.
|
S-1
|
333-63133
|
4.1
|
October 28, 1998
|
Executive Service Agreement between Mannatech Korea, Ltd. and Yong Jae (Patrick) Park, dated October 1, 2009.
|
*
|
*
|
*
|
*
|
|
First Amendment to Employment Agreement between Mannatech Incorporated and Robert A. Sinnott, MNS, PhD, dated December 18, 2008.
|
*
|
*
|
*
|
*
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer of Mannatech.
|
*
|
*
|
*
|
*
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer of Mannatech.
|
*
|
*
|
*
|
*
|
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer of Mannatech.
|
*
|
*
|
*
|
*
|
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer of Mannatech.
|
*
|
*
|
*
|
*
|
|
101.INS**
|
XBRL Instance Document
|
**
|
**
|
**
|
**
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
**
|
**
|
**
|
**
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
**
|
**
|
**
|
**
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
**
|
**
|
**
|
**
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
**
|
**
|
**
|
**
|
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
**
|
**
|
**
|
**
|
* | Filed herewith. |
** | Furnished herewith. In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. |
1.1 | The Company hereby agrees to appoint Mr. Park as General Manager of the Company and Mr. Park hereby agrees to such appointment to perform the functions and carry out the duties and responsibilities as General Manager of the Company as provided under Attachment “A” attached hereto and on the terms and conditions set forth hereinafter. |
1.2 | Mr. Park must disclose all other company directorships in which he is involved at the time of the Agreement, as indicated and attached hereto as Attachment “B” – “Disclosure of Directorships”. |
1.3
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The parties hereby expressly agree and acknowledge that given the responsibilities of Mr. Park to manage the business of the Company and work on behalf of the Company with respect to matters relating to employees of the Company, Mr. Park shall be an “employer” for purposes of Korean employment and labor laws. Nothing in this Agreement shall be construed to render Mr. Park an “employee” of the Company.
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3.1 | Base Salary . Mr. Park shall be paid a base salary of 123,000,000 KRW per annum which the Company shall pay to Mr. Park in equal installments of 10,250,000 KRW per month in accordance with its normal payroll policies (“Base Salary”). |
3.2 | Annual Discretionary Bonus . In addition to the Base Salary, Mr. Park will be eligible to receive an annual bonus ("Annual Bonus") from the Company based on the Company's performance and his contribution to the Company. On December 1 each year beginning from the year 2010, the Board shall review the performances of the Company and Mr. Park and report the same to the Board of Directors. The Board shall decide whether any Annual Bonus shall be awarded to Mr. Park, and if so, the amount of such Annual Bonus, taking into account the Company's business results and Mr. Park’s performance, for the prior year. |
3.3 | Automobile . Mr. Park will be provided an automobile of reasonable size, model and make, at the Company’s discretion, including the cost of gasoline, maintenance, and insurance and shall be provided at no charge to Mr. Park for business use during the Term of this Agreement. |
3.4 | Vacation . For each twelve (12) months of service, including his first 12 months service, Mr. Park shall be entitled to fifteen (15) days of vacation, which may be taken in any combination and at any time during each of said 12 month period, consistent with the requirements of his job duties. In the event of early termination of this Agreement, Mr. Park shall be credited with the vacation time in proportion to his actual service period. |
3.5 | Social Insurance Coverage . The Company shall subscribe Mr. Park to the requisite social insurances, including National Health and National Pension. The contributions to the requisite plans shall be borne by the Company and Mr. Park in accordance with the respective laws. |
3.6 | End of Service Benefit . Mr. Park shall receive an end of service payment which will accrue at the rate of forty-five (45) days base salary for each consecutive year of service; provided that this benefit shall not be paid until Mr. Park has worked for a minimum of twelve (12) consecutive months for the Company. |
4. | Sick Leave . |
5. | Term of Agreement . |
5.1 | This Agreement shall be effective as of the 1 st day of October, 2009 and continue in full force and effect for a period of one (1) year thereafter, subject to automatic renewal terms for an additional one (1) year unless this Agreement is terminated by either party (“Term”). |
5.2 | Either Party may terminate this Agreement at any time by giving thirty (30) days advance notice to the other party. The Agreement may be terminated without notice by the Company if Mr. Park materially breaches his duties as set forth in this agreement or in the Company’s regulations or, in the absence of such breach, if the Company pays Mr. Park thirty (30) days base salary in lieu of such advance notice. Mr. Park agrees that in the event of termination of his services with the Company, Mr. Park will assist the Company with any procedures in connection hereto. |
8.1 | During the course of the Agreement, Mr. Park will be given access to the Company's Confidential Information concerning Products and the business operations of the Company. |
8.2 | Mr. Park acknowledges that in the further course of the Agreement with the Company, he will gain a close, personal and special influence with Company's customers and will be acquainted with all of the Company's business, particularly the Company's Confidential Information concerning the business of the Company and its affiliates. |
8.3 | For purposes of this Agreement "Confidential Information" shall mean and include information disclosed to the Mr. Park or known by him through his Agreement with the Company, not generally known in the Company's industry, about the Company's products, processes and services, including but not limited to information concerning inventions, trade secrets, research and development, as well as all data or information concerning customers (including, Associates), customer lists (including downline reports and similar reports of business activities and relevant information concerning persons who conduct the same), prospect lists, mailing lists, sales leads, contracts, financial reports, sales, purchasing, price lists, product costs, marketing programs, marketing plans, business relationships, business methods, accounts payable, accounts receivable, accounting procedures, control procedures and training materials. |
8.4 | Mr. Park recognizes that his position with the Company is one of the highest trust and confidence by reason of his access to the Confidential Information and he agrees to use his best efforts and will exercise utmost diligence to protect and safeguard the Confidential Information. In this respect, the Mr. Park agrees that fulfilling the obligations of this Article VIII is part of the Mr. Park's responsibilities with the Company for which Mr. Park has been retained as General Manager and for which he will receive consideration therefor. |
8.5 | Except as may be required by the Company in connection with and during the Agreement with Company, or with the express written permission of Company, Mr. Park shall not, either during his work with the Company or at any time thereafter, directly or indirectly, download, print out, copy, remove from the premises of the Company, use for his own benefit or for the benefit of another, or disclose to another, any Confidential Information of the Company, its customers, contractors, or any other person or entity with which the Company has a business relationship. |
8.6 | As used in this Article, “Disclose” means to reveal, deliver, divulge, disclose, publish, copy, communicate, show or otherwise make known or available to any other person or entity, or in any way to copy, any of the Confidential Information. |
8.7 | Mr. Park agrees that all files, memoranda, data, notes, records, drawings, charts, graphs, analyses, letters, reports or other documents or similar items made or compiled by him, made available to him or otherwise coming into his possession during the Agreement concerning any process, apparatus or products manufactured, sold, used, developed, investigated or considered by the Company concerning the Confidential Information or concerning any other business or activity of the Company shall remain at all times the property of the Company and shall be delivered to the Company upon termination of this Agreement or at any other time upon request. |
8.8 | Mr. Park agrees that during the Term of this Agreement or upon termination thereof, and if requested by the Company to do so, he will sign an appropriate list of any and all Confidential Information of the Company of which he has knowledge about or which he has acquired information. |
8.9 | Mr. Park acknowledges that the violation of any of the provisions of this Article VIII will cause irreparable loss and harm to the Company which cannot be reasonably or adequately compensated by damages in an action at law, and accordingly, the Company will be entitled, without posting bond or other security, to injunctive and other equitable relief to enforce the provisions of this Section, but no action for any such relief shall be deemed to waive the right of the Company to an action for damages. |
9. | Reasonableness of Covenants . |
10. | Access to Communication System, etc. and Data Collection . |
General Manager
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By:
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Mr. Youg Jae (Patrick) Park
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On behalf of the Company
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By:
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Mr. Ronald Dale Norman
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Its:
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Director
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1. | Diligent Performance . During the Term, Mr. Park shall faithfully and diligently perform such duties and exercise such powers in relation to the Company as are specified herein, and as may from time to time be duly vested in him by the Company. Mr. Park shall perform his duties in a professional manner so as to embody and enhance the Company's reputation for excellence. |
2. | Management . As the General Manager of the Company, Mr. Park shall manage the affairs and day to day operation of the Company, provide planning, budgeting expertise, and support of the Korean Associates and generally represent the Company in its dealings with third parties in accordance with the guidelines and instructions of the Board of Directors. Mr. Park acknowledges that any matters beyond his authority pursuant to this Agreement must be referred to the Board of Directors for prior approval. |
3. | Directorship . At the request of the Board of Directors of the Company, Mr. Park shall serve as a director or representative director of the Company for a term and under conditions to be determined at the sole discretion of the Board of Directors. |
4. | Full Time . Mr. Park shall devote his best efforts, on a full time basis, to the performance of services for, and on behalf of, the Company, in accordance with the terms and conditions of this Agreement. In furtherance of his obligations under this Agreement, Mr. Park shall not perform any services, as an officer, director, employee, consultant or independent contractor for any person, or company unless approved by a unanimous vote of the Board of Directors authorizing such services. Notwithstanding the foregoing, Mr. Park shall be permitted to continue those services for other persons or companies which he has duly disclosed to the Shareholders on or before the date of this Agreement. |
4. | Downlines . Mr. Park, his spouse, family and other household members will not be allowed to hold a Company Independent Associate position (“Position”) (including but not limited to an individual, joint, trust, corporate or partnership position), in any country of operation during his association with the Company and for a period of one (1) year following his termination this Agreement, due to whatever cause(s). In the event Mr. Park or any member of his family or household as described herein hold a Position(s) at the time of execution hereof, Mr. Park agrees to immediately notify the Company and terminate the Position(s) in accordance with the Company’s Policies and Procedures. Mr. Park further agrees that he shall not use his association with the Company to preferentially aid in any Associate’s Company business. |
COMPANY:
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MANNATECH, INCORPORATED
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By:
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Wayne Badovinus
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President and Chief Executive Officer
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EMPLOYEE:
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Robert A. Sinnott, MNS, PhD
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Date: May 12, 2015
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/s/ Robert A. Sinnott
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Robert A. Sinnott
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Chief Executive Officer and
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Chief Science Officer
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Date: May 12, 2015
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/s/
S. Mark Nicholls
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S. Mark Nicholls
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Chief Financial Officer
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Date: May 12, 2015
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/s/ Robert A. Sinnott
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Robert A. Sinnott
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Chief Executive Officer and
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Chief Science Officer
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Date: May 12, 2015
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/s/
S. Mark Nicholls
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S. Mark Nicholls
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Chief Financial Officer
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