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SAMUEL CASTER - MANNATECH INC (MTEX)
CEO Interview - published 05/30/2005

DOCUMENT # ABV601

SAMUEL L. CASTER, Chairman and CEO of Mannatech, Incorporated, co-
founded Mannatech and directly owns 21.8% of  its common stock as of
April 1, 2004. Mr. Caster served as Mannatech's President and as a
Director on its Board of Directors from November 1993 until his
resignation on March 31, 2000. From June 1, 2000 through March 4, 2002,
Mr. Caster provided Mannatech with various consulting services related
to its associates' needs and was instrumental in the development of
Mannatech's revamped global associate career and compensation plan. Mr.
Caster was reappointed as a Class II Director to Mannatech's Board of
Directors on August 2, 2000 and was elected to serve as a Class II
Director by Mannatech's shareholders on June 2, 2003. From June 4, 2001
to March 4, 2002, Mr. Caster served as co-Chairman of Mannatech's Board
of Directors and since March 5, 2002 has served as its Chairman of the
Board. On April 15, 2003, Mr. Caster was elected Mannatech's Chief
Executive Officer. Mr. Caster has over 24 years' experience with various
network-marketing and direct selling companies. Mr. Caster also co-
founded MannaRelief, a non-profit international ministry formed to help
supply food supplements to at-risk children by working with other
ministries, non-profit organizations and missionaries throughout the
world. Mr. Caster is the brother-in-law of Mr. Donald Herndon,
Mannatech's Vice President of Field Services. Mr. Herndon is the
brother-in-law of Mr. Terry Persinger, who is Mannatech's President,
Chief Operating Officer and a Board member. 

Sector: FOOD

TWST: We would like to begin with a brief historical sketch of the
company and a picture of the things you are doing at the present time.


Mr. Caster: Our company was founded in 1994 with the passage of the law
called the Dietary Supplement Health and Education Act (DSHEA). My
partners and I were in and around the health industry and pharmaceutical
industry, and we recognized an opportunity in this quickly emerging
market that is now referred to as wellness. This market includes baby
boomers who want to stay young, fueling the whole anti-aging movement,
along with the people whose health is less than optimal, all looking for
complementary ways to improve their quality of life. We knew there was a
lot of science-based technology available for the marketplace,
particularly from a new segment called carbohydrate technology. So we
founded our company in 1994 and immediately started working on that
front. In 1996, we made the discovery of our core technology which is
called Ambrotose. It is a blend of plant-synthesized carbohydrates
called glyconutrients, which are necessary for the proper structure and
function of every human cell. In particular, they are essential for the
proper functioning of the human immune system. Since we were the first
to define the role of a dietary supply of these carbohydrates, we were
able to file composition of matter patents worldwide on that discovery;
again, this is the core carbohydrate technology of our product line.
Since 1994, we have grown the business to where it is today. Last year
we posted sales of $294 million, a 50% increase over the previous year.
We are very optimistic about where we're headed with our technology in
the marketplace.

TWST: Can you tell us about the 1994 registration?


Mr. Caster: Essentially, the Dietary Supplement Health and Education Act
is like the Magna Carta for the dietary supplement industry. Prior to
1994, you could make no reference to the benefit in health or benefit in
disease conditions of any particular nutrient without it being
considered a drug claim. In passing the law, Congress essentially stated
in their preamble that there is a direct link between nutrition and
disease and that consumers should have the right to credible scientific
information so that they can make more informed decisions in terms of
their health. This allowed companies like ours to do research and
development, to post that research in peer-reviewed journals, have it
published and make it available to the public. It also allowed us to
test our technology in disease conditions; show improvements in quality-
of-life biomarkers, then publish that information for use by the public.
A lot of nutritional supplements sold today promote a lot of benefits,
but not much of it is scientifically based. Essentially, with the
passage of DSHEA, Congress recognized the role that nutrition plays in
health and in recovery and prevention, and encouraged the industry to
start manufacturing and developing products that are clearly science-
based so that consumers could actually receive the benefit they believe
they are purchasing.

TWST: Was the DSHEA passed by a pretty good margin in both houses?


Mr. Caster: It was unanimous. I think everybody, regardless of party,
recognized the importance of the changing conditions in health care and
that something had to be done about it. I think that we're all looking
for ways to improve our entire healthcare system, from prevention to
treatment to cost.

TWST: Can you tell us about Ambrotose'?


Mr. Caster: A whole new science developed in the early 1990s called
glycobiology. Prior to the 1990s, biochemistry taught that all
carbohydrates (i.e., all sugars) were used by the body for only one
function, the production of energy. There was simply no other known
biological function of sugar molecules. In the late 1980s and early
1990s, sugar structures called glycoproteins ' sugars connected by a
protein stem ' were discovered. It is now known that eight specific
sugars are necessary for the cell to transfer biological data.
Researchers used to think that all information was transferred through
proteins. Then they realized that there were not enough possible protein
combinations to transfer that level of data. Once we looked more closely
at the human cell, we saw that all these sugars connected to these
proteins and we realized that this was how the final data was dispersed
and interpreted ' through sugar structures. The eight sugars that are
necessary for glycoprotein synthesis just happened to be in plants that
have historically great medicinal value, like aloe vera for instance.
Its primary sugar is mannose, and it is one of those eight sugars. So
this is a kind of reverse engineering: We had the historical data
regarding the health benefits of various plants, and now we are
discovering the active ingredients in those plants and how they support
the normal physiological functions of recovery and restoration.  When we
discovered the eight sugars, we realized two things. With the exception
of glucose and galactose, which is a milk sugar, most of those sugars do
not exist anymore in today's typical diets. The body needs the sugars,
so we had to find a dietary supply of those sugars. Again, we saw
tremendous impact on the aging biomarkers and on quality-of-life. So
this was just a new discovery in this field of necessary nutrients, very
much like the discovery of vitamins and minerals, then amino acids and
essential fatty acids. Now we know the role carbohydrates play in the
biological function of glycoprotein synthesis.

TWST: What are the different ways that people take these? Is it also
advisable to take vitamins?


Mr. Caster: Let me answer the second part of that first. In
biochemistry, there is a whole chart listing the essential nutrients
that the body must have. The most important nutrient is the one that is
deficient in your body. So whether that is a glyconutrient sugar or
vitamin A or calcium or an omega-3 fatty acid or arginine, which is an
amino acid, they're each necessary for proper structure and function. We
just happened to discover this newly discovered category of nutrients.
We were able to file the composition of matter patents because no one
had ever considered their value as a dietary supplement. All of these
are important. In fact, in our Optimal Health System which we recommend
for everyone, we include all of those components that I just mentioned
because they are all necessary for the body to function. If any one of
them were missing, you could have a compromised immune system and
compromised health. In processing these glyconutrients we mainly freeze-
dry their components so that they are stable and efficacious. Then we
blend them together into a powder form. We can add that powder to, for
instance, our vitamin and mineral product; or to our antioxidant
product. We do this for a very good reason. Carbohydrates have been
shown scientifically to help the absorption of minerals in particular.
Blending these carbohydrates into the vitamin and mineral supplement is
a good way of enhancing their bioavailability. We also sell our
glyconutritional product Ambrotose by itself, either in capsules or in a
bulk powder. People just take a scoop of this powder; sometimes they
just eat it, sometimes they put it in a drink and stir it up, or
sometimes they put it on their food. It really doesn't matter what they
blend it with as long as they get a supply of it every day.

TWST: How do you market and distribute your products?


Mr. Caster: We chose a distribution model called network marketing
because of two challenges. First, when our predecessors in the
carbohydrate field, the people who discovered the first active sugar in
aloe vera, tried to sell their technology through retail health food
stores, it was hard to compete price-wise with other products with
similar names; aloe vera is aloe vera to most people. But, stabilizing
these sugars is very costly in contrast to un-stabilized aloe vera. So
they found it very difficult to compete in the retail market. A second
challenge is that in a healthcare environment, when you start talking
about a complex of sugars, you're starting behind the curve. In general,
most people are not aware that they need a blend of sugars in their
diet. If anything, they've heard that sugar is bad and that they should
stay away from it, especially if they have health challenges like
diabetes. Well, that is true in the case of sucrose but not these other
sugars since they don't cause an insulin response in the body. Not only
are these sugars safe, they are necessary. Because we knew we could not
effectively tell this story and educate consumers through the retail
model, we started a networking company to allow individuals who are
taking and benefiting from our product to share their stories and our
science with other consumers who want to improve their own quality of
life. It's a very effective way to get our technology into the
marketplace.

TWST: You became active in a number of countries?


Mr. Caster: Yes. Though we went into Australia in 1997, we've been
deliberately slow and methodical about entering the foreign markets. We
are open in seven countries now, and in June, we will open operations in
Taiwan, our eighth country.

TWST: Have you grown faster than you thought you would?


Mr. Caster: I think we've grown faster than the industry would predict.
The entire dietary supplement industry grew less than 5% last year, and
we grew by over 50%. So those of us who understand our technology are
very excited about our prospects of continued growth. Virtually everyone
else is competing to sell basically the same types of products, whether
it's a vitamin-mineral product or an antioxidant or an enzyme or a
protein. We have a patent pending in this country and we're patented in
most of the other countries we are in. Since we have patents filed,
issued or pending on our technology, it gives us a very proprietary
product and a unique story in the dietary supplement market. Compounded
with that is the fact that these sugars are very efficacious in their
impact on quality of life, and it sets up the perfect scenario for fast
growth. We still have a long way to go in this country. Though we did
over $200 million last year in the United States, we know we can do much
better because of our unique technology.

TWST: Have you received any letters from people who use these products,
saying that they have done different things for them?


Mr. Caster: Yes, we receive letters of testimony all the time. At sales
meetings, people constantly share benefits that they've experienced
while taking these products. We've actually surveyed product users to
determine the impact our products are having on health conditions. This
information enables us to gear our research initiatives where we can
make the biggest impact.

TWST: I would assume that you could always either improve or add to
something with your product. What do you have in mind?


Mr. Caster: From a research standpoint, because biomarkers of optimal
health are very critical, we look at things like bone density, lean-to-
fat ratio, and biomarkers such as cholesterol and C-reactive proteins.
Also, through the passage of DSHEA, the FDA was instructed to implement
GMPs, or Good Manufacturing Practices, into our industry. They already
have been implemented in countries like Canada and Australia, and will
soon be initiated here. Much of our research and development is devoted
to the validation of efficacy for GMP purposes. For instance, if you
claim that your product is an antioxidant, you will soon have to prove
it; this is a great thing for consumers and a great thing for the
industry. A lot of our current research and development focuses on
developing chemical assays that measure the existence of the various
sugars-the amounts, o the efficacy, antioxidant effect, what they do and
how effective they are. Our primary initiative right now is to develop
more assays that validate our GMPs.

TWST: Could you tell us more about the health benefits, more or less
starting from the top down?


Mr. Caster: Let me answer that question by saying this: science has
found that sugars are necessary for proper immune system function. When
your immune system is compromised and does not function appropriately,
any disease can manifest itself more aggressively. For example, everyone
has cancer cells in their body. The reason I'm not diagnosed or you are
not diagnosed with cancer is that our immune system functions at a level
that recognizes those cells, kills them, and hopefully keeps us ahead of
the curve. But just the environment we live in today launches a daily
assault on the proper functioning of our immune system. Once your immune
system is compromised, you are susceptible to the manifestation of every
kind of disease function.  Once you have a disease, your recovery is
totally dependent upon how functional your immune system is. Drugs don't
repair the body; only the human body can repair itself. Drugs interfere
with the physiological processes within the disease categories that help
the body heal itself. When you find components that are necessary for
proper cellular defense and proper immune function, and you introduce
those into the diets of people with compromised health, you typically
see ' regardless of whether they are at pre-disease or post-disease
conditions ' an across-the-board improvement in their quality of life.
Everyone needs good nutrition. Sick people just need more of it to
support the systems of recovery. So what do we see out there? We see
benefits in every kind of health situation that you could possibly name
because our product is not a drug but rather a nutrient that is
necessary for the basic functions of physiology and recovery. When we
supply what is missing or deficient into the diets of people to help
their immune systems work, we see an across-the-board improvement.

TWST: How long does it usually take before the benefits begin to be
noticed?


Mr. Caster: In many cases, people whose health is compromised notice
changes almost immediately. Glyconutrients are also necessary for those
people who feel well to keep their immune systems intact and all their
defense systems functioning appropriately. Since they are 'healthy,'
they may not see a noticeable difference in their quality of life.
Ultimately, how fast or noticeable the changes are depends on the level
of your health when you start taking the products.

TWST: Looking out over the next two or three years, what are the key
elements in your strategy at Mannatech?


Mr. Caster: Again, our core technology centers on glyconutrients. We
were invited last year to share our technology at MIT's second annual
Emerging Technologies Conference. MIT had projected that the science of
sugars, glycomics, is one of 10 technologies that will impact the world
in the next decade. Our technology fits right into that category. Our
goals are many. We will continue improving the efficacy and quality of
our products. We will continue to develop chemical assays in order to
validate the efficacy of our product for GMP purposes. We will continue
conducting the research necessary to facilitate the healthcare
community's better understanding of the benefit of dietary
supplementation. We will also continue spreading the message of the
business model of networking, expanding into foreign countries and
taking advantage of the trends toward wellness.

TWST: What about problems and challenges?


Mr. Caster: Fast growth brings its own unique set of challenges. And
such challenges as making sure that we keep up the supply are good
challenges to have if you're in a fast-growth company. The laws
regarding GMPs are changing in every country so that creates challenges.
In some cases more science is required, in some cases, a change of
formulation; in other cases, more data must be supplied to the
particular governments. So meeting GMPs worldwide is a huge initiative,
made more complex because as every country defines their own laws, in
some cases their standards are congruent with United States standards,
in some cases they are quiet different, meaning that we have to develop
more formulations to meet new criteria in those countries. Simply
getting the word out to the general public regarding the value of such
an abstract technology as that of sugars will constantly be one of our
main challenges in every country. So we're always looking for more
effective ways to educate the public about glyconutrients.

TWST: What would you reasonably expect Mannatech to look like three
years from now?


Mr. Caster: There are two things that are playing a big role in our
dynamic growth. First, the consumer market for dietary supplements is
exploding worldwide. More and more people are looking for alternative or
complementary approaches to healthcare challenges. Second, the baby
boomers are focusing on anti-aging. Be it physical exercise equipment,
dietary supplements or reconstructive surgery, it is a premium with the
baby boomer generation right now. So it is a very aggressive market
right now. We feel, as our proprietary technology gains international
prominence and as people experience the ongoing efficacy of our
products, we don't anticipate a slowdown in our growth anywhere.

TWST: Could you tell us about your own background and expertise and the
backgrounds of one or two other people in the company, including a
scientist?


Mr. Caster: My background lies mainly in marketing. I have had extensive
experience in building network marketing business models for the
distribution of new technologies, so I brought that expertise to the
table ' an understanding of how to take abstract new technology,
simplify the message, and get it to the consumers through this business
model. I also brought an understanding of how to manage the dynamics of
a network marketing company. Because it primarily involves working with
a volunteer force of sales associates, you can't 'manage'; rather, you
have to inspire and motivate them. That's the expertise from the
business standpoint that I bring to the table. Our doctors on staff
include

Dr. Bill McAnalley, our Chief Science Officer. He is the scientist who
actually made the discovery of the active molecule in aloe vera. He
discovered that it was a sugar, and he dealt with the pharmaceutical
applications of that sugar for 15 years prior to joining Mannatech.

Dr. Steven Boyd, Medical Director of Health Sciences, had been in charge
of clinical studies at a pharmaceutical company that used carbohydrate
technology; he came to Mannatech to help us organize and oversee our
clinical studies and disseminate that kind of information into peer-
reviewed journals. So we have some very good people on our scientific
team. Terry Persinger, our President and Chief Operating Officer, has
been an executive Vice President at Goodyear, a billion-dollar plus
company. He understands the necessity of building systems and bringing
strategic planning to handle the dynamic growth we're experiencing.

TWST: Do you see any need to improve the company's capital structure?


Mr. Caster: Not really. We are mainly a cash business. We have no long-
term debt. We are growing extremely well in capital. We are paying
dividends on our stock every quarter now. Actually, we feel very
comfortable with our cash position.

TWST: Do you feel that you've been completely successful in
communicating your message to the investment community?


Mr. Caster: No, I don't. I don't think we've been successful at all,
really. We went through some management and ownership changes four or
five years ago, causing sales losses in our company; at that time we
really didn't want to tell anybody what we were doing because we had a
lot of housecleaning to do. Once we got through that process and
reestablished the management group that we wanted, re-created a new
Board of Directors, and started doing the things that have enabled the
business to experience three straight years of positive growth, now we
feel it's time to get our story out.

TWST: What was that housecleaning all about?


Mr. Caster: I co-founded the company with two other men. After we went
public, the other founders began to sell their stock as aggressively as
possible just to cash out of the business. I felt that was damaging both
to our image on Wall Street and also to our business atmosphere by
showing a lack of faith in our future. So I actually resigned from the
Board of Directors to force the issue that one of us needed to take
control of the company. It didn't do much good for me to promote the
long-term viability of this business and its exciting future when we had
an ownership and a Board that supported the aggressive selling of their
own stock. So I left the company for a while. Once I got an agreement
from the other founders to sell out and turn the management of the
company back into my hands, I returned. We facilitated their desire to
be bought out, released many of the people associated with that strategy
and rebuilt a quality management team. We also built the best Board of
any company in our industry. For example, we have four people on our
Board of Directors who are in the Direct Selling Association's Hall of
Fame because of the types of businesses they built over their careers.
Once we put all that together, we're now seeing the manifestation of
what I originally thought our company was capable of doing. Once we
removed all the distractions and got everybody back on track, our
business immediately turned around and started growing at the level I
expected.

TWST: What would be the three or four best reasons for an investor now
to take a very good look at Mannatech?


Mr. Caster: Economically, the wellness industry is predicted to be a
trillion-dollar business in the next 10 years. This is a huge industry
evolving before our very eyes. This is driven by the baby boomer
generation and the people who are looking for alternative health care.
Secondly, we have established ourselves as one of the true,
scientifically based developers of dietary supplements in this industry.
You could probably count on two hands the number of companies that have
significant patented discoveries in our industry, and I think we're the
only one that has a patent on necessary nutrients in biochemistry.
Thirdly, I believe we have a proven business model and management team
that can maintain the current level of growth and can lead us into truly
becoming one of the leading companies in the industry, with the biggest
market share of anybody in wellness.

TWST: Could you talk about how your distribution model differs from that
of other companies in the wellness industry ' Amway, for instance?


Mr. Caster: It's actually the same type of business model; it's just a
different product line. Although there are a lot of retail outlets that
do extremely well, network marketing is a wonderful form of distribution
to get technology, particularly new technology or abstract technology,
down to the lowest common denominator out in the marketplace. Take just
a small family in a small town, for example. They don't have to open up
a facility; there's no brick and mortar necessary, and they don't have
the capitalization of expansion because all their expansion is done
through word of mouth. So it's an incredible business model for
expansion not only in this country but around the world. So we're the
same as Amway in that respect.

TWST: Is there anything that you would like to add, particularly with
regard to your strategy and your vision?


Mr. Caster: If you look at the trends in healthcare costs, and if you
understand what unfunded Social Security looks like in the future, and
that unfunded Medicare benefits are 5 times worse than Social Security,
then you know that something has to change in our philosophy of health
care. And that change is coming. It is mandatory that we find new
wellness strategies that address people's health on the front end
instead of always dealing with it on the back end when disease
conditions occur. There's a lot of momentum behind wellness, and I think
this government and governments all over the world are seeing that. Yes,
the healthcare environment is a little slow to come around, but I
believe it will. If you study the future of health care and look for the
best strategy to meet an unmanageable demand for healthcare costs, the
only thing that makes sense is prevention. That's where the industry is
headed, and I think the people who recognize that trend now and line up
with the companies that have the best opportunity to capture market
share in that segment are going to be very pleased in the next five to
10 years.

TWST: Thank you. (MC)


SAMUEL L. CASTER
 Chairman & CEO
 Mannatech, Incorporated
 600 S. Royal Lane
 Suite 200
 Coppell, TX 75010
 (972) 471-7400
 (972) 471-8135 - FAX
 www.mannatech.com
 e-mail: ir@mannatech.com

Copyright 2005 The Wall Street Transcript Corporation
All Rights Reserved


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