##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark
One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
 _____ 
to
 _____
 Commission file number: 000-50417
 RBC LIFE SCIENCES, INC.
  Nevada
    
    91-2015186(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)2301 Crown Court, Irving, Texas
    
    75038(Address of principal executive offices)
    
    (Zip Code)
 972-893-4000
 None
 Common
Stock, $0.001 par value
  Yes o No þ
 Yes o No þ
 Yes þ No o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if smaller reporting company)
 Yes o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




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FORWARD LOOKING STATEMENTS




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##### 



RBC LIFE SCIENCES, INC.
 
  PAGEPART I
    
    
    2Item 1.Business
    
    
    2Item 1A.Risk Factors
    
    
    14Item 1B.Unresolved Staff Comments
    
    
    21Item 2.Properties
    
    
    21Item 3.Legal Proceedings
    
    
    21Item 4.Submission of Matters to a Vote of Security Holders
    
    
    21PART II
    
    
    22Item 5.Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    22Item 6.Selected Financial Data
    
    
    23Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    23Item 7A.Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 8.Financial Statements and Supplementary Data
    
    
    33Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    33Item 9A(T).Controls and Procedures
    
    
    33Item 9B.Other Information
    
    
    34PART III
    
    
    35Item 10.Directors, Executive Officers and Corporate Governance
    
    
    35Item 11.Executive Compensation
    
    
    35Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    35Item 13.Certain Relationships and Related Transactions, and Director Independence
    
    
    35Item 14.Principal Accounting Fees and Services
    
    
    35PART IV
    
    
    36Item 15.Exhibits, Financial Statement Schedules
    
    
    36SIGNATURES
    
    
    38Exhibit 10.12Exhibit 10.13Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   1




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PART I
 
 Item 1. Business
 Overview
     www.rbclifesciences.com www.mpmmedicalinc.com
 Industry Overview
 Nutritional Products.
 Nutrition Business Journal
  2




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
    
    The general publics interest in healthier lifestyles, healthier aging and disease
prevention;
    
    The aging population, particularly the baby-boomer generation, which we believe is more
likely to use more nutritional supplementation as it ages;
    
    Rising health care costs and reduced confidence in prescription drugs causing many
consumers to take preventative measures, including alternative medicines and nutritional
supplements; and
    
    The publication of research findings supporting the positive health effects of certain
nutritional supplements.
  
    
    Mass market retailers, including mass merchandisers, drug stores, supermarkets, and
discount stores;
    
    Natural health food retailers;
    
    Network marketing;
    
    Mail order;
    
    Health care professionals and practitioners; and
    
    The Internet.
  Medical Products.
 
    
    Wound management products such as adhesive bandages and gauze;
    
    Wound closure products such as staples, various clips and sutures;
    
    Advanced wound care products, which are represented by a variety of moist wound healing
dressings such as alginate dressings, film dressings, foam dressings, hydrocolloid
dressings and hydrogel dressings;
    
    Active wound healing products such as skin replacements, collagen dressings and growth
factors;
    
    Debriding products including various cleansers; and
    
    Pressure relief devices such as beds, mattress overlays and other support devices.
   Competitive Strengths
 Product Portfolio.
  3




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In-house Manufacturing. ® ®
 Science-based Product Development.
 Operating Flexibility.
 Experienced Management Team.
 Business Strategy
  Leverage and Expand our Relationship with CCI.
 Expand our Existing Network Marketing Associate Base.
 Expand Medical Products in Existing and New Markets.
  4




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Develop Improved and New Products.
 Products
  Nutritional Products
 
    
    Microhydrin and Microhydrin Plus  powerful, broad-spectrum antioxidants;
    
    Organic spirulina  sold in powder, tablet and capsule forms, a nutritious algae
that provides a complete range of vital nutrients and a higher percentage of easily
digested protein than meat;
    
    ColoVada  an effective fourteen-day colon cleansing program that has been
widely used for more than 20 years;
    
    HydraCelTM  a product that improves the quality of drinking water by
reducing surface tension and making water more alkaline;
    
    24 Seven Life Essentials®  a daily multivitamin/mineral supplement;
    
    Immune 360TM  a product to nourish and support the function of the
immune system;
    
    Digestion Formula  a combination of digestive enzymes to supplement the decline
of enzymes that naturally occurs with aging; and
    
    Cellution 7TM  a science-based skin care product collection that
incorporates ingredients with unique benefits.
   
    
    Silica mineral hydride, a nutritional antioxidant manufactured by us using our
proprietary formula and process and used as an ingredient in the formulation of
nutritional supplement and personal care products;
    
    Organic spirulina sourced from the highest quality producers, sold as a
stand-alone product and combined as an ingredient in many other nutritional
supplement formulations; and
    
    Organic aloe vera specially processed to retain the benefits found in a fresh
aloe vera leaf and sold as a beverage and as a topical gel and used as an
ingredient in many of our skin care products.
  5




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Medical Products
  Manufacturing and Product Sourcing
   Sales by Geographic Area
  Independent Distributor Network
 Overview.
   6




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Associates.
 Sponsoring.
  Compensation.
 
    
    Through retail markups on sales of products purchased at wholesale; and
    
    Through a series of commissions on product sales generated by the Associate and
his or her downline Associates.
  Support.
    7




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Compliance.
 Returns.
  Licensees
   Medical Products Distribution
 Sales force.
 Distribution.
   8




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Third-Party Reimbursement.
 Trademarks, Patents or Other Intellectual Property
   Seasonality
  Inventory Requirements, Backlogs
    9




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Industry/Competitors
     Research and Development
   Governmental Regulations
 Products.
  10




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11




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12




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Network Marketing.
   Transfer Pricing.
 Employees
   13




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Additional Available Information
 www.sec.gov
 
 Item 1A. Risk Factors.
 If we continue to lose existing Associates more rapidly than we recruit new Associates, net sales
from our Associate network will continue to decrease.
   
    
    on-going motivation of our Associates;
    
    general business and economic conditions;
    
    significant changes in the amount of commissions paid;
    
    public perception and acceptance of the nutritional supplement industry;
    
    public perception and acceptance of network marketing;
    
    public perception and acceptance of RBC and our products;
    
    the limited number of people interested in pursuing network marketing as a business;
    
    our ability to provide products that satisfy market demands; and
    
    competition in recruiting and retaining active Associates
 Two of our customers constitute a significant portion of our sales.
   14




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Two of our products constitute a significant portion of our net sales.
  Net sales of our Nutritional Products are dependent upon an independent sales force and third-party
licensees, and we do not have direct control over the marketing of our products.
   Our Associate network business is subject to the effects of adverse publicity and negative public
perception.
   15




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Changes in customer preferences and demand could negatively impact our operating results.
  
    
    accurately anticipate customer needs;
    
    innovate and develop new products or product enhancements that meet these needs;
    
    successfully commercialize new products or product enhancements in a timely manner;
    
    price our products competitively;
    
    manufacture and deliver our products in sufficient volumes and in a timely manner;
    
    differentiate our product offerings from those of our competitors; and
    
    Satisfy applicable government regulations related to the manufacture, labeling,
sale and distribution of the products
   We may have to obtain regulatory approvals before we market and sell certain new Medical Products.
  Growth of Medical Products sales depends in part upon the availability of adequate third-party
reimbursement.
   16




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We must rely on independent third parties for the supply of our products.
  As a product manufacturer and distributor we may be subject to product liability claims.
  A violation of marketing or advertising laws by Associates in connection with the sale of our
products or the promotion of our Associate compensation plan could adversely affect our business.
  Laws and regulations may prohibit or severely restrict our sales efforts and could adversely affect
our ability to do business.
    17




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Our business is subject to the risks associated with intense competition from larger, wealthier and
more established competitors.
   Our business is subject to intellectual property risks.
   18




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We rely on and are subject to risks associated with our reliance upon information technology
systems.
  Our future financial results could be adversely impacted by asset impairments.
 Goodwill and
Other Intangible Assets,
 Changes in conditions in foreign territories and exchange rate fluctuations affect our foreign
operations and could reduce our net sales and earnings.
  Taxation and transfer pricing considerations affect our international operations.
   19




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We may be held responsible for certain taxes relating to our distributors.
  Our stock price has been volatile and subject to various market conditions.
   The beneficial ownership of a significant percentage of our common stock gives Clinton H. Howard
effective control and limits the influence of other shareholders on important policy and management
issues.
  If our shareholders sell a substantial number of shares of our common stock in the public market,
the market price of our common stock could fall.
  We depend on our key personnel, and the loss of the services provided by any of our executive
officers or other key employees could harm our business and results of operations.
   20




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Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
  
 Item 3. Legal Proceedings.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
   21




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PART II
 
 Item 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
  QUARTER ENDED
    
    3/31/07
    
    
    6/30/07
    
    
    9/30/07
    
    
    12/31/07HIGH
    
    $
    0.47
    
    
    $
    0.78
    
    
    $
    0.86
    
    
    $
    1.10LOW
    
    
    0.21
    
    
    
    0.36
    
    
    
    0.60
    
    
    
    0.71
 QUARTER ENDED
    
    3/31/06
    
    
    6/30/06
    
    
    9/30/06
    
    
    12/31/06HIGH
    
    $
    1.10
    
    
    $
    0.65
    
    
    $
    0.55
    
    
    $
    0.44LOW
    
    
    0.50
    
    
    
    0.45
    
    
    
    0.30
    
    
    
    0.21
   Sales of Unregistered Securities
  Repurchases of Equity Securities
   22




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Item 6. Selected Financial Data.
  Years Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands, except per share data)Statement of Operations
Data:Net sales
    
    $
    27,029
    
    
    $
    21,697
    
    
    $
    19,361
    
    
    $
    18,266
    
    
    $
    18,140Earnings (loss) from
continuing operations
    
    
    1,692
    
    
    
    436
    
    
    
    592
    
    
    
    537
    
    
    
    (180
    )Earnings (loss) from
continuing
operations per
common share -
diluted
    
    
    0.08
    
    
    
    0.02
    
    
    
    0.03
    
    
    
    0.03
    
    
    
    (0.01
    )Net earnings (loss)
    
    
    1,692
    
    
    
    436
    
    
    
    592
    
    
    
    537
    
    
    
    (105
    )Balance Sheet Data:Cash and cash equivalents
    
    
    6,369
    
    
    
    3,220
    
    
    
    1,698
    
    
    
    1,052
    
    
    
    502Working capital (deficit)
    
    
    3,539
    
    
    
    1,935
    
    
    
    1,140
    
    
    
    123
    
    
    
    (814
    )Total assets
    
    
    19,158
    
    
    
    13,639
    
    
    
    12,811
    
    
    
    11,264
    
    
    
    10,723Long-term obligations
    
    
    2,332
    
    
    
    2,924
    
    
    
    3,106
    
    
    
    3,152
    
    
    
    3,470Shareholders equity
    
    
    7,578
    
    
    
    5,607
    
    
    
    5,021
    
    
    
    4,428
    
    
    
    3,824
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview
  
    
    Through the Nutritional Products segment, we distribute products in three broad
categories: (i) wellness products, (ii) fitness products and (iii) skin care products.
Products include herbal formulas, vitamins, minerals, antioxidants and personal care
products. In certain markets, principally in the United States and Canada, we distribute
Nutritional Products directly through a network of independent Associates. In certain
international markets, we distribute Nutritional Products through exclusive license
arrangements with third parties, who, for the most part, distribute our products through an
independent Associate network in the licensed territory.
    
    Through the Medical Products segment, we distribute wound care products. These products
are distributed in the United States to hospitals, nursing homes, clinics and pharmacies
through traditional medical/surgical supply dealers and pharmaceutical distributors.
Medical Products are used to prevent and treat wounds, and manage pain associated with
wounds, in the acute care, long-term care, oncology and podiatry markets.
  23




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Net sales
 Years Ended December 31,2007
    
    
    2006
    
    
    2005(U.S. dollars in
000s)Nutritional Products:Associate network
    
    $
    6,891
    
    
    
    25
    %
    
    $
    8,538
    
    
    
    40
    %
    
    $
    9,505
    
    
    
    49
    %Licensees
    
    
    15,632
    
    
    
    58
    %
    
    
    9,399
    
    
    
    43
    %
    
    
    7,022
    
    
    
    36
    %22,523
    
    
    
    83
    %
    
    
    17,937
    
    
    
    83
    %
    
    
    16,527
    
    
    
    85
    %Medical Products
    
    
    4,506
    
    
    
    17
    %
    
    
    3,760
    
    
    
    17
    %
    
    
    2,834
    
    
    
    15
    %$
    27,029
    
    
    
    100
    %
    
    $
    21,697
    
    
    
    100
    %
    
    $
    19,361
    
    
    
    100
    %
 Associate network.
  Years Ended December 31,2007
    
    
    2006
    
    
    2005United States
    
    
    80
    %
    
    
    74
    %
    
    
    79
    %Canada
    
    
    20
    
    
    
    19
    
    
    
    21South Korea
    
    
    
    
    
    
    7
    
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    24




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Licensees.
  Medical Products.
  Cost of Sales.
 Distributor Commissions
 Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of the Vendors Products)
 General and Administrative
  25




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Critical Accounting Polices and Estimates
  Revenue Recognition. Revenue Recognition
in Financial Statements
 Intangible Assets.
 Income Taxes.
 Accounting for Uncertainty in Income Taxes  an interpretation of
FASB Statement 109
   26




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Share-based Payments. Share-Based Payment,
  Results of Operations
  Years Ended December 31,2007
    
    
    2006
    
    
    2005Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    44.9
    
    
    
    39.5
    
    
    
    38.6Gross profit
    
    
    55.1
    
    
    
    60.5
    
    
    
    61.4Operating expenses:General and administrative
    
    
    33.8
    
    
    
    39.5
    
    
    
    37.3Distributor commissions
    
    
    9.3
    
    
    
    13.7
    
    
    
    16.6Depreciation and amortization
    
    
    1.3
    
    
    
    2.8
    
    
    
    3.0Total operating expenses
    
    
    44.4
    
    
    
    56.0
    
    
    
    56.9Operating profit
    
    
    10.7
    
    
    
    4.5
    
    
    
    4.5Interest expense
    
    
    0.7
    
    
    
    1.2
    
    
    
    1.3Earnings before income taxes
    
    
    10.0
    
    
    
    3.3
    
    
    
    3.2Income tax expense
    
    
    3.7
    
    
    
    1.3
    
    
    
    0.1Net earnings
    
    
    6.3
    %
    
    
    2.0
    %
    
    
    3.1
    %
 2007 Compared with 2006
 Net sales.
   27




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
    
    Marketing message  We modified our marketing message to focus on new products and
their benefits, and the business opportunity and desirable lifestyle available to a
successful Associate. In addition, we developed, introduced and promoted new
sponsoring systems that were simple and easy to explain to prospective Associates.
    
    Product strategy  We first categorized our diverse product line into three major
product groups. We then developed and introduced new products in each product group,
allowing us, in some cases, to eliminate redundant products from the product line. We
continue to develop and introduce new products to support sales in each product
category.
    
    Marketing materials  We have developed and introduced and are continuing to develop
and introduce, new marketing tools that make it easy and simple for Associates to
expose our products and business to prospective new Associates.
    
    Associate compensation plan  We have introduced changes to our Associate
compensation plan to make it financially rewarding at all levels and to encourage
sponsoring.
    
    Corporate support  We have significantly increased the support, including financial
support, we provide to Associates who are actively engaged in sponsoring activities.
We also undertook various advertising and direct mail initiatives to attract new
prospects and increase communication with existing Associates.
    Cost of sales.
 General and administrative.
  28




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Distributor commissions.
 Income taxes.
 Net earnings.
 2006 Compared with 2005
 Net sales.
    Cost of sales.
  29




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General and administrative.
 Distributor commissions.
 Income taxes.
 Net earnings.
 Liquidity and Capital Resources
  Cash and working capital.
  Operating activities
  30




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Investing activities.
 Financing activities
 General liquidity and cash flows
  Contractual Cash Obligations
  Payments Due by Period (000s)Contractual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2013 andObligations
    
    Total
    
    
    2008
    
    
    2009 - 2010
    
    
    2011 - 2012
    
    
    BeyondLong-term debt
    
    $
    2,330
    
    
    $
    134
    
    
    $
    300
    
    
    $
    351
    
    
    $
    1,545Capital leases
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    495
    
    
    
    197
    
    
    
    281
    
    
    
    17
    
    
    
    Purchase obligations
    
    
    2,706
    
    
    
    2,706
    
    
    
    
    
    
    
    
    
    
    
    Employment agreements
    
    
    4,210
    
    
    
    1,555
    
    
    
    1,845
    
    
    
    637
    
    
    
    173
  31




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Off-Balance Sheet Arrangements
  Inflation
  Recent Accounting Pronouncements
 Fair Value Measurements. Fair Value
Measurements
 Fair Value Option for Financial Assets and Financial Liabilities. The Fair Value Option for Financial Assets and Financial Liabilities
 Business Combinations. Business
Combinations
 Noncontrolling Interests in Consolidated Financial Statements. Noncontrolling Interests in Consolidated Financial Statements  An Amendment
of ARB No. 51
  32




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Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
  Foreign exchange.
 Interest rates.
 
 Item 8. Financial Statements and Supplementary Data.
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A(T). Controls and Procedures.
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
   33




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Internal ControlIntegrated
Framework Internal ControlIntegrated Framework
  Changes in Internal Control over Financial Reporting
  
 Item 9B. Other Information.
 None.
  34




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PART III
  
 Item 10. Directors, Executive Officers and Corporate Governance.
  
 Item 11. Executive Compensation.
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accounting Fees and Services.
   35




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PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
 (a)(1)  Financial Statements.
 Report of Independent Registered Public Accounting Firm  Lane Gorman Trubitt, L.L.P.Consolidated Balance SheetsConsolidated Statements of OperationsConsolidated Statements of Shareholders EquityConsolidated Statements of Cash FlowsNotes to Consolidated Financial Statements(a)(2)
    
    Financial Statement Schedules. None.(a)(3)
    
    Exhibits.The following exhibits are filed as part of this report:
 Ex. No.
    
    Description3.1
    
    Articles of Incorporation(2)3.2
    
    Bylaws(2)3.3
    
    Amendment No. 1 to Bylaws(6)4.1
    
    Specimen copy of Certificate for Common Stock(2)4.2
    
    The 2003 Stock Incentive Plan(4)4.3
    
    The 2006 Stock Incentive Plan(11)10.1
    
    Form of Member Agreement and Policies with Distributors(1)10.2
    
    Form of Indemnification Agreement(2)10.3
    
    Lease Agreement dated August 23, 1994, by and between Royal BodyCare Canada,
Inc. (f/k/a Pure Life International Products, Inc.) and Mott Electric Motor Repair
Ltd.(10)10.4
    
    Purchase and Sale Agreement, dated as of August 21, 2000, between CIIF
Associates II Limited Partnership and Royal BodyCare, Inc.(3)10.5
    
    Employment Agreement, dated November 20, 2003, between Royal BodyCare, Inc. and
Clinton H. Howard(7)10.6
    
    Exclusive Distributorship Agreement, dated as of July 14, 2004, between Royal
BodyCare, Inc. and Coral Club International, Inc.(9)10.7
    
    Agreement to Renew Lease dated May 26, 2005, by and between Royal BodyCare
Canada, Inc. and Mott Electric Motor Repair Ltd.(10)10.8
    
    Agreement to Buy and Sell RBC Life Sciences Korea, dated October 31, 2006,
between RBC Life Sciences USA and Merry Key(12)10.9
    
    Exclusive Distributorship Agreement, dated November 1, 2006, between RBC Life
Sciences USA, Inc. and Merry Key(12)10.10
    
    Line of Credit Promissory Note, dated December 29, 2006, in the principal
amount of $900,000, executed by RBC Life Sciences, Inc. in favor of The Frost National
Bank(13)
  36




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##### Table of Contents



Ex. No.
    
    Description10.11
    
    Business Loan Agreement, dated December 29, 2006, between RBC Life Sciences,
Inc. and The Frost National Bank, associated with $900,000 Line of Credit Promissory
Note(13)10.12
    
    Line of Credit Promissory Note, dated November 1, 2007, in the principal
amount of $500,000, executed by RBC Life Sciences, Inc. in favor of Independent Bank of
Texas *10.13
    
    Business Loan Agreement, dated November 1, 2007, between RBC Life Sciences,
Inc. and Independent Bank of Texas, associated with $500,000 Line of Credit Promissory
Note *10.14
    
    Employment Agreement, executed December 7, 2007, between RBC Life Sciences,
Inc. and John W. Price(14)10.15
    
    Employment Agreement, executed December 11, 2007 to be effective January 1,
2008, between RBC Life Sciences, Inc. and Kenneth L. Sabot(14)10.16
    
    Employment Agreement, executed December 11, 2007 to be effective January 1,
2008, between RBC Life Sciences, Inc. and Steven E. Brown(14)14.1
    
    Code of Ethics(8)21.1
    
    List of company subsidiaries*23.1
    
    Consent of Lane Gorman Trubitt, L.L.P., independent registered public
accountants to incorporation of report by reference*23.2
    
    Consent of Gardere Wynne Sewell LLP, legal counsel(5)24.1
    
    Power of Attorney(5)31.1
    
    Certification of Principal Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*31.2
    
    Certification of Principal Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*32.1
    
    Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section
1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*32.2
    
    Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section
1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
 
 *
    
    Filed herewith(1)
    
    Incorporated by reference to the Annual Report on Form 10-K/A filed May 7, 1999(2)
    
    Incorporated by reference to the Annual Report on Form 10-K filed April 26, 2000(3)
    
    Incorporated by reference to the Quarterly Report on Form 10-Q filed November 13, 2000(4)
    
    Incorporated by reference to the Current Report on Form 8-K filed September 29, 2003(5)
    
    Incorporated by reference to the registration statement filed on Form S-8 filed October 15,
2003(6)
    
    Incorporated by reference to the Quarterly Report on Form 10-Q filed November 14, 2003(7)
    
    Incorporated by reference to the Current Report on Form 8-K filed December 3, 2003(8)
    
    Incorporated by reference to the Annual Report on Form 10-K filed April 14, 2004(9)
    
    Incorporated by reference to the Current Report on Form 8-K filed July 27, 2004(10)
    
    Incorporated by reference to the Current Report on Form 8-K filed June 1, 2005(11)
    
    Incorporated by reference to the registration statement filed on Form S-8 filed December 22,
2006(12)
    
    Incorporated by reference to the Current Report on Form 8-K filed November 6, 2006(13)
    
    Incorporated by reference to the Annual Report on Form 10-K filed March 14, 2007(14)
    
    Incorporated by reference to the Current Report on Form 8-K filed December 13, 2007  37




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##### Table of Contents



RBC LIFE SCIENCES, INC.,
a Nevada corporationDate:  March 18, 2008
    By:
    /s/ Clinton H. HowardClinton H. Howard, Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Clinton H. Howard

Clinton H. Howard
    
    Chairman of the Board of
Directors and Chief Executive Officer
(principal executive officer)
    
    March 18, 2008/s/ Steven E. Brown

Steven E. Brown
    
    Director, Vice President-Finance and
Chief Financial Officer
(principal financial and accounting
officer)
    
    March 18, 2008/s/ John W. Price

John W. Price
    
    Director and President
    
    March 18, 2008/s/ Kenneth L. Sabot

Kenneth L. Sabot
    
    Director and Senior Vice President-Operations
    
    March 18, 2008/s/ Paul R. Miller

Paul R. Miller
    
    Director and President-
MPM Medical, Inc.
    
    March 18, 2008/s/ J. Ike Guest

J. Ike Guest
    
    Director
    
    March 18, 2008/s/ Joseph. P. Philipp

Joseph P. Philipp
    
    Director
    
    March 18, 2008
  38




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##### Table of Contents



INDEX TO FINANCIAL PAGES
 PageReport of Independent Registered Public Accounting Firm  Lane Gorman Trubitt, L. L. P.
    
    
    F-2Consolidated Financial StatementsBalance Sheets
    
    
    F-3Statements of Operations
    
    
    F-4Statements of Shareholders Equity
    
    
    F-5Statements of Cash Flows
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
  F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      
  F-2




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
 
   2007
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    6,368,885
    
    
    $
    3,219,503Accounts receivable, net of allowance for doubtful accounts
of $34,169 and $34,739, respectively
    
    
    687,505
    
    
    
    331,834Inventories
    
    
    4,725,372
    
    
    
    2,651,082Deferred income taxes
    
    
    340,395
    
    
    
    231,680Prepaid expenses
    
    
    305,960
    
    
    
    499,267Total current assets
    
    
    12,428,117
    
    
    
    6,933,366Property and equipment, net of accumulated depreciation
    
    
    4,078,035
    
    
    
    3,584,415Goodwill, net of accumulated amortization
    
    
    2,302,226
    
    
    
    2,219,297Other intangible assets, net of accumulated amortization
    
    
    151,758
    
    
    
    194,173Other assets
    
    
    198,306
    
    
    
    708,187$
    19,158,442
    
    
    $
    13,639,438LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable, trade
    
    $
    1,932,158
    
    
    $
    850,143Accrued liabilities
    
    
    2,498,682
    
    
    
    1,165,247Current maturities of long-term obligations
    
    
    135,428
    
    
    
    379,635Lines of credit
    
    
    
    
    
    
    100,000Deferred revenue
    
    
    4,323,316
    
    
    
    2,503,638Total current liabilities
    
    
    8,889,584
    
    
    
    4,998,663Long-term obligations, less current maturities
    
    
    2,196,468
    
    
    
    2,543,964Deferred income taxes
    
    
    494,265
    
    
    
    489,810Commitments and contingenciesShareholders equityPreferred stock, $0.10 par value; authorized 20,000,000 shares;
none outstanding
    
    
    
    
    
    
    Common stock, $.001 par value; authorized 50,000,000 shares;
20,863,724 and 20,188,294 shares issued and outstanding
in 2007 and 2006, respectively
    
    
    20,864
    
    
    
    20,188Additional paid-in capital
    
    
    13,086,182
    
    
    
    12,916,035Accumulated deficit
    
    
    (5,720,001
    )
    
    
    (7,412,250
    )Accumulated other comprehensive income
    
    
    191,080
    
    
    
    83,0287,578,125
    
    
    
    5,607,001$
    19,158,442
    
    
    $
    13,639,438
   F-3




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
 
   2007
    
    
    2006
    
    
    2005Net sales
    
    $
    27,028,529
    
    
    $
    21,696,631
    
    
    $
    19,360,982Cost of sales
    
    
    12,129,963
    
    
    
    8,578,243
    
    
    
    7,474,632Gross profit
    
    
    14,898,566
    
    
    
    13,118,388
    
    
    
    11,886,350Operating expensesGeneral and administrative
    
    
    9,142,624
    
    
    
    8,564,448
    
    
    
    7,224,260Distributor commissions
    
    
    2,522,978
    
    
    
    2,978,336
    
    
    
    3,212,996Depreciation and amortization
    
    
    334,445
    
    
    
    609,311
    
    
    
    578,871Total operating expenses
    
    
    12,000,047
    
    
    
    12,152,095
    
    
    
    11,016,127Operating profit
    
    
    2,898,519
    
    
    
    966,293
    
    
    
    870,223Interest expense
    
    
    209,770
    
    
    
    252,175
    
    
    
    251,465Earnings before income taxes
    
    
    2,688,749
    
    
    
    714,118
    
    
    
    618,758Income tax expense
    
    
    996,500
    
    
    
    277,914
    
    
    
    26,712Net earnings
    
    $
    1,692,249
    
    
    $
    436,204
    
    
    $
    592,046Basic earnings per share
    
    $
    0.08
    
    
    $
    0.02
    
    
    $
    0.03Basic weighted average shares outstanding
    
    
    20,396,420
    
    
    
    20,163,544
    
    
    
    20,056,294Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.02
    
    
    $
    0.03Diluted weighted average shares outstanding
    
    
    22,206,382
    
    
    
    22,047,152
    
    
    
    21,499,438
   F-4




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
 
  Additional
    
    
    
    
    
    
    Accumulated other
    
    
    TotalCommon stock
    
    
    paid-in
    
    
    Accumulated
    
    
    comprehensive
    
    
    shareholdersShares
    
    
    Amount
    
    
    capital
    
    
    deficit
    
    
    income
    
    
    equityBalance at January 1, 2005
    
    
    20,056,294
    
    
    $
    20,056
    
    
    $
    12,789,978
    
    
    $
    (8,440,500
    )
    
    $
    58,088
    
    
    $
    4,427,622Other comprehensive incomeNet earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    592,046
    
    
    
    
    
    
    
    592,046Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,507
    
    
    
    1,507Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    593,553Balance at December 31, 2005
    
    
    20,056,294
    
    
    
    20,056
    
    
    
    12,789,978
    
    
    
    (7,848,454
    )
    
    
    59,595
    
    
    
    5,021,175Other comprehensive incomeNet earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    436,204
    
    
    
    
    
    
    
    436,204Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,433
    
    
    
    23,433Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    459,637Exercise of common stock options
    
    
    132,000
    
    
    
    132
    
    
    
    19,008
    
    
    
    
    
    
    
    
    
    
    
    19,140Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    107,049
    
    
    
    
    
    
    
    
    
    
    
    107,049Balance at December 31, 2006
    
    
    20,188,294
    
    
    
    20,188
    
    
    
    12,916,035
    
    
    
    (7,412,250
    )
    
    
    83,028
    
    
    
    5,607,001Other comprehensive incomeNet earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,692,249
    
    
    
    
    
    
    
    1,692,249Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,052
    
    
    
    108,052Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,800,301Exercise of common stock options
    
    
    675,430
    
    
    
    676
    
    
    
    97,874
    
    
    
    
    
    
    
    
    
    
    
    98,550Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    72,273
    
    
    
    
    
    
    
    
    
    
    
    72,273Balance at December 31, 2007
    
    
    20,863,724
    
    
    $
    20,864
    
    
    $
    13,086,182
    
    
    $
    (5,720,001
    )
    
    $
    191,080
    
    
    $
    7,578,125
   F-5




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
 
   2007
    
    
    2006
    
    
    2005Cash flows from operating activitiesNet earnings
    
    $
    1,692,249
    
    
    $
    436,204
    
    
    $
    592,046Adjustments to reconcile net earnings to net cash
provided by operationsDepreciation and amortization
    
    
    362,809
    
    
    
    634,703
    
    
    
    593,130Losses on write off of note receivable and
disposition of assets
    
    
    535,249
    
    
    
    169,501
    
    
    
    Deferred income taxes
    
    
    (104,260
    )
    
    
    258,130
    
    
    
    22,473Stock-based compensation
    
    
    72,273
    
    
    
    107,049
    
    
    
    Change in operating assets and liabilitiesAccounts receivable
    
    
    (355,671
    )
    
    
    15,677
    
    
    
    82,368Inventories
    
    
    (2,055,759
    )
    
    
    730,040
    
    
    
    (1,323,135
    )Prepaid expenses
    
    
    194,775
    
    
    
    (122,895
    )
    
    
    (60,293
    )Other assets
    
    
    (4,591
    )
    
    
    (230,779
    )
    
    
    (93,333
    )Accounts payable, trade
    
    
    1,076,737
    
    
    
    (251,842
    )
    
    
    387,268Accrued liabilities
    
    
    1,291,382
    
    
    
    57,922
    
    
    
    (53,845
    )Deferred revenue
    
    
    1,819,678
    
    
    
    279,297
    
    
    
    667,566Net cash provided by operating activities
    
    
    4,524,871
    
    
    
    2,083,007
    
    
    
    814,245Cash flows from investing activitiesPurchase of property and equipment
    
    
    (827,884
    )
    
    
    (488,345
    )
    
    
    (111,186
    )Proceeds from sale of assets
    
    
    820
    
    
    
    107,457
    
    
    
    27,711Net cash used in investing activities
    
    
    (827,064
    )
    
    
    (380,888
    )
    
    
    (83,475
    )Cash flows from financing activitiesExercise of common stock options
    
    
    98,550
    
    
    
    19,140
    
    
    
    Net payments against lines of credit
    
    
    (100,000
    )
    
    
    (22,249
    )
    
    
    (3,395
    )Proceeds from long-term debt
    
    
    
    
    
    
    
    
    
    
    400,000Payments of long-term debt
    
    
    (566,703
    )
    
    
    (182,169
    )
    
    
    (465,173
    )Net cash used in financing activities
    
    
    (568,153
    )
    
    
    (185,278
    )
    
    
    (68,568
    )Effect of exchange rate changes on cash flows
    
    
    19,728
    
    
    
    4,696
    
    
    
    (15,747
    )Net increase in cash
    
    
    3,149,382
    
    
    
    1,521,537
    
    
    
    646,455Cash and cash equivalents at beginning of year
    
    
    3,219,503
    
    
    
    1,697,966
    
    
    
    1,051,511Cash and cash equivalents at end of year
    
    $
    6,368,885
    
    
    $
    3,219,503
    
    
    $
    1,697,966Supplemental cash flow disclosuresInterest paid
    
    $
    212,662
    
    
    $
    253,553
    
    
    $
    238,497Income taxes paid
    
    
    45,947
    
    
    
    25,056
    
    
    
    3,284Receivable recorded in connection with the sale
of South Korea operations
    
    
    
    
    
    
    520,000
    
    
    
    Purchase of equipment by capital lease
    
    
    
    
    
    
    
    
    
    
    18,495
  F-6




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
 
        Principles of Consolidation
 Cash and Cash Equivalents
 Accounts Receivable
   F-7




---



##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
    Inventories
 Property and Equipment
 Intangible Assets and Amortization Goodwill and Other Intangible Assets ,
  Impairment of Long-Lived Assets
 Revenue Recognition and Deferred Revenue
   F-8




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
    Distributor
Commissions - Accounting for Consideration Given by a Vendor to a Customer (Including
a Reseller of the Vendors Products)
 Income
Taxes -
 Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement 109
 Earnings Per Share
 Accounting Estimates
 Financial Instruments
  F-9




---



##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
    Segment Information
 Product Return Policy
 Advertising
 Translation of Foreign Currencies
 Other Comprehensive Income (Loss)
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 Share-Based Payment,
  F-10




---



##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
    New Accounting Pronouncements -
 Fair Value Measurements
 Fair Value Measurements
 Fair Value Option for Financial Assets and Financial Liabilities
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Business Combinations
 Business Combinations,
 Noncontrolling Interests in Consolidated Financial Statements
 Noncontrolling Interests in Consolidated
Financial Statements  An Amendment of ARB No. 51,
  F-11




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
    Reclassifications
   2007
    
    
    2006Accounts receivableTrade
    
    $
    692,969
    
    
    $
    365,851Other
    
    
    28,705
    
    
    
    722Total
    
    
    721,674
    
    
    
    366,573Less allowance for doubtful accounts
    
    
    34,169
    
    
    
    34,739Net accounts receivable
    
    $
    687,505
    
    
    $
    331,834
  2007
    
    
    2006Beginning balance
    
    $
    34,739
    
    
    $
    32,586Bad debt provision
    
    
    4,041
    
    
    
    3,020Accounts written off
    
    
    (4,611
    )
    
    
    (867
    )Ending balance
    
    $
    34,169
    
    
    $
    34,739
   2007
    
    
    2006Raw materials and bulk products
    
    $
    573,625
    
    
    $
    411,880Packaging materials
    
    
    509,541
    
    
    
    422,063Finished goods
    
    
    3,642,206
    
    
    
    1,817,139$
    4,725,372
    
    
    $
    2,651,082
   2007
    
    
    2006Advance payments to suppliers
    
    $
    179,844
    
    
    $
    368,536Prepaid insurance and other
    
    
    126,116
    
    
    
    130,731Total
    
    $
    305,960
    
    
    $
    499,267
  F-12




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
     2007
    
    
    2006Building and improvements
    
    $
    3,314,482
    
    
    $
    2,775,109Computer software and office equipment
    
    
    1,567,381
    
    
    
    3,050,784Warehouse equipment
    
    
    345,030
    
    
    
    271,309Automotive equipment
    
    
    55,392
    
    
    
    55,392Leasehold improvements
    
    
    22,120
    
    
    
    18,7585,304,405
    
    
    
    6,171,352Less accumulated depreciation and amortization
    
    
    2,367,543
    
    
    
    3,728,1102,936,862
    
    
    
    2,443,242Land
    
    
    1,141,173
    
    
    
    1,141,173$
    4,078,035
    
    
    $
    3,584,415
  Goodwill and Other Intangible Assets
  December 31, 2007
    
    
    December 31, 2006Gross
    
    
    
    
    
    
    Grosscarrying
    
    
    Accumulated
    
    
    carrying
    
    
    Accumulatedvalue
    
    
    amortization
    
    
    value
    
    
    AmortizationGoodwill
    
    $
    3,443,512
    
    
    $
    (1,141,286
    )
    
    $
    3,281,690
    
    
    $
    (1,062,393
    )
  December 31, 2007
    
    
    December 31, 2006Average
    
    
    Gross
    
    
    
    
    
    
    Grosslife
    
    
    carrying
    
    
    Accumulated
    
    
    carrying
    
    
    Accumulated(years)
    
    
    value
    
    
    amortization
    
    
    value
    
    
    amortizationDistribution contracts
    
    
    8
    
    
    $
    277,369
    
    
    $
    (211,583
    )
    
    $
    277,369
    
    
    $
    (178,625
    )Copyrights, trademarks and
other registrations
    
    
    19
    
    
    
    99,100
    
    
    
    (33,694
    )
    
    
    99,100
    
    
    
    (28,409
    )Other
    
    
    11
    
    
    
    47,600
    
    
    
    (27,034
    )
    
    
    47,600
    
    
    
    (22,862
    )$
    424,069
    
    
    $
    (272,311
    )
    
    $
    424,069
    
    
    $
    (229,896
    )
  F-13




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
     2008
    
    $
    42,4072009
    
    
    24,0492010
    
    
    21,6262011
    
    
    13,7922012
    
    
    5,957Thereafter
    
    
    43,927$
    151,758
   2007
    
    
    2006Distributor commissions
    
    $
    362,900
    
    
    $
    415,474Income taxes
    
    
    1,052,813
    
    
    
    Salaries and wages
    
    
    850,855
    
    
    
    556,058Sales and property taxes
    
    
    57,908
    
    
    
    73,060Interest
    
    
    15,064
    
    
    
    20,312Other
    
    
    159,142
    
    
    
    100,343Total
    
    $
    2,498,682
    
    
    $
    1,165,247
     F-14




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
     2007
    
    
    2006Mortgage note payable bearing interest at
7.75%, payable in monthly installments of
$25,797 through April 2019, collateralized
by land and building, and personally guaranteed by
the Companys Chief Executive Officer
    
    $
    2,330,130
    
    
    $
    2,453,855Note payable to bank bearing interest at 7.96%
    
    
    
    
    
    
    339,848Convertible notes (original amount $730,000)
bearing interest at 10%, convertible into
common stock based on a per share
conversion price of $1.32 (there were no
conversions in 2007 or 2006)
    
    
    
    
    
    
    121,500Capital lease obligation
    
    
    1,766
    
    
    
    8,3962,331,896
    
    
    
    2,923,599Less  current maturities
    
    
    135,428
    
    
    
    379,635$
    2,196,468
    
    
    $
    2,543,964
   December 31,
    
    Debt
    
    
    Capital lease2008
    
    $
    133,662
    
    
    $
    1,7962009
    
    
    144,397
    
    
    
    2010
    
    
    155,994
    
    
    
    2011
    
    
    168,522
    
    
    
    2012
    
    
    182,056
    
    
    
    Thereafter
    
    
    1,545,499
    
    
    
    2,330,130
    
    
    
    1,796Less amount representing interest
    
    
    
    
    
    
    30Less current maturities
    
    
    133,662
    
    
    
    1,766$
    2,196,468
    
    
    $
    
  F-15




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
    Stock incentive plans
    Other stock options
  Stock option accounting
  Accounting for Income Taxes
  F-16




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
    Fair value
  Year Ended December 31,2007
    
    
    2006
    
    
    2005 (1)Weighted average expected life (years)
    
    
    8.7
    
    
    
    9.0
    
    
    
    Risk-free interest rate
    
    
    4.29
    %
    
    
    4.72
    %
    
    
    
    %Expected volatility
    
    
    136.79
    %
    
    
    138.31
    %
    
    
    
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    
    %
 (1)
    
    There were no option grants during this period.  Stock option activity
  Weighted-AverageWeighted-
    
    
    Remaining
    
    
    AggregateAverage Exercise
    
    
    Contractual Term
    
    
    IntrinsicOptions
    
    
    Price per Share
    
    
    (in years)
    
    
    ValueOutstanding on January 1, 2005
    
    
    3,607,000
    
    
    $
    0.22Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited/Canceled
    
    
    (42,000
    )
    
    
    0.77Outstanding on December 31, 2005
    
    
    3,565,000
    
    
    
    0.21Granted
    
    
    524,150
    
    
    
    0.41Exercised
    
    
    (132,000
    )
    
    
    0.15Forfeited/Canceled
    
    
    (200,000
    )
    
    
    0.74Outstanding on December 31, 2006
    
    
    3,757,150
    
    
    
    0.22Granted
    
    
    512,950
    
    
    
    0.80Exercised
    
    
    (675,430
    )
    
    
    0.15Forfeited/Canceled
    
    
    (99,720
    )
    
    
    0.17Outstanding on December 31, 2007
    
    
    3,494,950
    
    
    $
    0.32
    
    
    
    4.7
    
    
    $
    1,760,779Exercisable on December 31, 2007
    
    
    2,628,410
    
    
    $
    0.25
    
    
    
    3.9
    
    
    $
    1,499,276
  F-17




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
     Weighted AverageGrant Date FairShares
    
    
    Value per ShareNon-vested stock options January 1, 2007
    
    
    1,109,370
    
    
    $
    0.15Non-vested stock options granted
    
    
    483,550
    
    
    
    0.77Vested stock options
    
    
    (635,330
    )
    
    
    0.14Forfeited stock options
    
    
    (91,050
    )
    
    
    0.16Non-vested stock options at December 31, 2007
    
    
    866,540
    
    
    
    0.50
  Year Ended December 31,2007
    
    
    2006
    
    
    2005Grant date fair value of stock options granted
    
    $
    394,779
    
    
    $
    208,064
    
    
    $
    Grant date fair value of stock options vested
    
    
    112,507
    
    
    
    107,049
    
    
    
    81,041Intrinsic value of stock options exercised
    
    
    481,030
    
    
    
    67,980
    
    
    
    
   Year Ended December 31,2005Net earnings, as reported
    
    $
    592,046Deduct: Total stock-based employee compensation expense
determined under fair-value based method for all awards,
net of related tax expense
    
    
    (81,041
    )Pro forma net earnings
    
    $
    511,005Earnings per share  basic and dilutedAs reported
    
    $
    0.03Pro forma
    
    
    0.02
  F-18




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
     Year Ended December 31,2007
    
    
    2006
    
    
    2005Federal income tax expense at statutory rate
    
    $
    914,175
    
    
    $
    242,800
    
    
    $
    210,378State income taxes, net of federal benefit
    
    
    (3,309
    )
    
    
    26,636
    
    
    
    22,914Stock-based compensation
    
    
    21,554
    
    
    
    36,221
    
    
    
    Effect of foreign operations, net of foreign tax credits
    
    
    (6,775
    )
    
    
    (10,578
    )
    
    
    (3,687
    )Change in valuation allowance
    
    
    69,284
    
    
    
    
    
    
    
    (209,348
    )Other, net
    
    
    1,571
    
    
    
    (17,165
    )
    
    
    6,455Income tax expense
    
    $
    996,500
    
    
    $
    277,914
    
    
    $
    26,712
  December 31,2007
    
    
    2006Deferred tax assets related to:Inventories
    
    $
    327,765
    
    
    $
    217,413Accounts receivable and other assets
    
    
    11,959
    
    
    
    12,853Accrued liabilities
    
    
    32,646
    
    
    
    11,527Tax loss and tax credit carryforwards
    
    
    105,046
    
    
    
    93,246Other
    
    
    3,357
    
    
    
    1,150480,773
    
    
    
    336,189Valuation allowance
    
    
    (117,484
    )
    
    
    (48,200
    )Net deferred tax assets
    
    
    363,289
    
    
    
    287,989Deferred tax liabilities related to:Property and equipment
    
    
    (148,792
    )
    
    
    (209,754
    )Intangible assets
    
    
    (368,367
    )
    
    
    (336,365
    )Deferred tax liabilities
    
    
    (517,159
    )
    
    
    (546,119
    )Net deferred tax liabilities
    
    $
    (153,870
    )
    
    $
    (258,130
    )Net current deferred tax assets
    
    $
    340,395
    
    
    $
    231,680Net long-term deferred tax liabilities
    
    
    (494,265
    )
    
    
    (489,810
    )$
    (153,870
    )
    
    $
    (258,130
    )
    F-19




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
     Year Ended December 31,2007
    
    
    2006
    
    
    2005CurrentFederal
    
    $
    1,100,760
    
    
    $
    19,784
    
    
    $
    4,239Foreign
    
    
    
    
    
    
    
    
    
    
    DeferredFederal
    
    
    (104,260
    )
    
    
    284,528
    
    
    
    22,473Foreign
    
    
    
    
    
    
    (26,398
    )
    
    
    Income tax expense
    
    $
    996,500
    
    
    $
    277,914
    
    
    $
    26,712
  Leases
  December 31,2008
    
    $
    197,0642009
    
    
    190,0612010
    
    
    91,2112011
    
    
    16,788$
    495,124
 Employee Arrangements
   F-20




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
      Litigation
      F-21




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
         Nutritional Products
    
    
    Medical Products
    
    
    ConsolidatedYear ended December 31, 2007Net sales
    
    $
    22,523
    
    
    $
    4,506
    
    
    $
    27,029Depreciation and amortization
    
    
    272
    
    
    
    91
    
    
    
    363Operating profit
    
    
    2,645
    
    
    
    254
    
    
    
    2,899Capital expenditures
    
    
    806
    
    
    
    22
    
    
    
    828Total assets
    
    
    17,309
    
    
    
    1,849
    
    
    
    19,158Year ended December 31, 2006Net sales
    
    $
    17,937
    
    
    $
    3,760
    
    
    $
    21,697Depreciation and amortization
    
    
    581
    
    
    
    54
    
    
    
    635Operating profit
    
    
    422
    
    
    
    544
    
    
    
    966Capital expenditures
    
    
    486
    
    
    
    2
    
    
    
    488Total assets
    
    
    12,543
    
    
    
    1,096
    
    
    
    13,639Year ended December 31, 2005Net sales
    
    $
    16,527
    
    
    $
    2,834
    
    
    $
    19,361Depreciation and amortization
    
    
    552
    
    
    
    41
    
    
    
    593Operating profit
    
    
    593
    
    
    
    277
    
    
    
    870Capital expenditures
    
    
    111
    
    
    
    
    
    
    
    111Total assets
    
    
    11,259
    
    
    
    1,552
    
    
    
    12,811
  F-22




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
     Net sales
    
    
    Long-lived assetsYear ended December 31, 2007Domestic
    
    $
    10,011
    
    
    $
    6,133Former Soviet Union
    
    
    14,950
    
    
    
    Canada
    
    
    1,382
    
    
    
    597South Korea
    
    
    14
    
    
    
    All others
    
    
    672
    
    
    
    Totals
    
    $
    27,029
    
    
    $
    6,730Year ended December 31, 2006Domestic
    
    $
    10,101
    
    
    $
    6,201Former Soviet Union
    
    
    8,644
    
    
    
    Canada
    
    
    1,608
    
    
    
    505South Korea
    
    
    587
    
    
    
    All others
    
    
    757
    
    
    
    Totals
    
    $
    21,697
    
    
    $
    6,706Year ended December 31, 2005Domestic
    
    $
    10,345
    
    
    $
    6,097Former Soviet Union
    
    
    6,677
    
    
    
    Canada
    
    
    1,987
    
    
    
    515South Korea
    
    
    
    
    
    
    72All others
    
    
    352
    
    
    
    Totals
    
    $
    19,361
    
    
    $
    6,684
 Significant Customers
   F-23




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
     Net Earnings
    
    
    Shares
    
    
    Per ShareYear ended December 31, 2007Basic earnings per common share
    
    $
    1,692,249
    
    
    
    20,396,420
    
    
    $
    0.08Effect of dilutive stock options
    
    
    
    
    
    
    1,809,962Diluted earnings per common share
    
    $
    1,692,249
    
    
    
    22,206,382
    
    
    $
    0.08Year ended December 31, 2006Basic earnings per common share
    
    $
    436,204
    
    
    
    20,163,544
    
    
    $
    0.02Effect of dilutive stock options
    
    
    
    
    
    
    1,883,608Diluted earnings per common share
    
    $
    436,204
    
    
    
    22,047,152
    
    
    $
    0.02Year ended December 31, 2005Basic earnings per common share
    
    $
    592,046
    
    
    
    20,056,294
    
    
    $
    0.03Effect of dilutive stock options
    
    
    
    
    
    
    1,443,144Diluted earnings per common share
    
    $
    592,046
    
    
    
    21,499,438
    
    
    $
    0.03
    Debt Guarantees
 Customer
Arrangement -
  F-24




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##### Table of Contents



RBC Life Sciences, Inc. and Subsidiaries
     Quarter EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(Unaudited - In thousands, except per share data)2007:Net sales
    
    $
    5,392
    
    
    $
    7,148
    
    
    $
    7,857
    
    
    $
    6,632Gross profit
    
    
    3,304
    
    
    
    3,793
    
    
    
    4,156
    
    
    
    3,646Net earnings(1)
    
    
    325
    
    
    
    510
    
    
    
    672
    
    
    
    185Basic earnings per share
    
    
    0.02
    
    
    
    0.03
    
    
    
    0.03
    
    
    
    0.01Diluted earnings per share
    
    
    0.02
    
    
    
    0.02
    
    
    
    0.03
    
    
    
    0.012006:Net sales
    
    $
    4,809
    
    
    $
    6,203
    
    
    $
    5,405
    
    
    $
    5,280Gross profit
    
    
    3,256
    
    
    
    3,574
    
    
    
    3,103
    
    
    
    3,185Net earnings (loss)
    
    
    (39
    )
    
    
    293
    
    
    
    80
    
    
    
    102Basic earnings (loss) per
share
    
    
    (0.00
    )
    
    
    0.01
    
    
    
    0.00
    
    
    
    0.01Diluted earnings (loss)
per share
    
    
    (0.00
    )
    
    
    0.01
    
    
    
    0.00
    
    
    
    0.00
 (1)
    
    As described in Note N, the Company recorded an aggregate charge of $516,000, or
$335,000 net of tax, during 2007 to write off the note receivable received in connection
with the sale of South Korean operations in 2006. Of this charge, $87,000 net of tax and
$248,000 net of tax, was recorded in the third quarter and fourth quarter of 2007,
respectively.  F-25




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##### Table of Contents



Exhibit Index
 Exhibit Number
    
    Description10.12
    
    Line of Credit Promissory Note, dated November 1, 2007, in
the principal amount of $500,000, executed by RBC Life
Sciences, Inc. in favor of Independent Bank of Texas10.13
    
    Business Loan Agreement, dated November 1, 2007, between
RBC Life Sciences, Inc. and Independent Bank of Texas,
associated with $500,000 Line of Credit Promissory Note21.1
    
    List of company subsidiaries23.1
    
    Consent of Lane Gorman Trubitt, L.L.P., independent
registered public accountants to incorporation of report by
reference31.1
    
    Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Principal Executive Officer Pursuant to 18
U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 200232.2
    
    Certification of Principal Financial Officer Pursuant to 18
U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002