##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 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)
    
    (IRS Employer Identification No.)2301 Crown Court, Irving, Texas
    
    75038(Address of principal executive offices)
    
    (Zip code)
 (Registrants telephone number, including area code)
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if smaller reporting company)
 o YES þ NO




---



##### 



Page NumberPART I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (unaudited)
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosure about Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    17PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3. Defaults Upon Senior Securities
    
    
    18Item 4. Submission of Matters to a Vote of Security Holders
    
    
    18Item 5. Other Information
    
    
    18Item 6. Exhibits
    
    
    18Signatures
    
    
    19Exhibit Index
    
    
    20Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




---



##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 RBC LIFE SCIENCES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    5,729,735
    
    
    $
    6,368,885Accounts receivable, net
    
    
    392,156
    
    
    
    687,505Inventories
    
    
    4,945,662
    
    
    
    4,725,372Deferred income taxes
    
    
    341,395
    
    
    
    340,395Prepaid expenses
    
    
    358,633
    
    
    
    305,960Total current assets
    
    
    11,767,581
    
    
    
    12,428,117Property and equipment, net
    
    
    4,077,549
    
    
    
    4,078,035Goodwill, net
    
    
    2,281,305
    
    
    
    2,302,226Intangible assets, net
    
    
    141,155
    
    
    
    151,758Other assets
    
    
    204,874
    
    
    
    198,306$
    18,472,464
    
    
    $
    19,158,442LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable, trade
    
    $
    1,779,147
    
    
    $
    1,932,158Accrued liabilities
    
    
    1,245,895
    
    
    
    2,498,682Current maturities of long-term obligations
    
    
    136,268
    
    
    
    135,428Deferred revenue
    
    
    4,687,047
    
    
    
    4,323,316Total current liabilities
    
    
    7,848,357
    
    
    
    8,889,584Long-term obligations, less current maturities
    
    
    2,161,408
    
    
    
    2,196,468Deferred income taxes
    
    
    467,474
    
    
    
    494,265Shareholders equity:Common stock, $0.001 par value; 50,000,000
shares authorized; 21,242,664 and 20,863,724 shares
issued and outstanding at March 31, 2008 and
December 31, 2007, respectively
    
    
    21,243
    
    
    
    20,864Additional paid-in capital
    
    
    13,171,355
    
    
    
    13,086,182Accumulated deficit
    
    
    (5,365,142
    )
    
    
    (5,720,001
    )Accumulated other comprehensive income
    
    
    167,769
    
    
    
    191,0807,995,225
    
    
    
    7,578,125$
    18,472,464
    
    
    $
    19,158,442
   - 3 -




---



##### Table of Contents



RBC LIFE SCIENCES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the Quarters Ended March 31,2008
    
    
    2007Net sales
    
    $
    6,347,691
    
    
    $
    5,392,052Cost of sales
    
    
    2,844,902
    
    
    
    2,087,737Gross profit
    
    
    3,502,789
    
    
    
    3,304,315Operating expenses:General and administrative
    
    
    2,252,753
    
    
    
    1,966,856Distributor commissions
    
    
    557,647
    
    
    
    654,890Depreciation and amortization
    
    
    80,787
    
    
    
    90,218Total operating expenses
    
    
    2,891,187
    
    
    
    2,711,964Operating profit
    
    
    611,602
    
    
    
    592,351Interest expense
    
    
    44,743
    
    
    
    59,210Earnings before income taxes
    
    
    566,859
    
    
    
    533,141Provision for income taxes
    
    
    212,000
    
    
    
    208,000Net earnings
    
    $
    354,859
    
    
    $
    325,141Earnings per share:Basic
    
    $
    0.02
    
    
    $
    0.02Diluted
    
    
    0.02
    
    
    
    0.02Weighted average common shares outstanding:Basic
    
    
    21,114,437
    
    
    
    20,188,294Diluted
    
    
    22,572,680
    
    
    
    21,556,552
   - 4 -




---



##### Table of Contents



RBC LIFE SCIENCES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Quarters Ended March 31,2008
    
    
    2007Cash flows from operating activities:Net earnings
    
    $
    354,859
    
    
    $
    325,141Adjustment for non-cash items:Depreciation and amortization
    
    
    88,777
    
    
    
    96,084Stock-based compensation
    
    
    29,428
    
    
    
    19,852Deferred income taxes
    
    
    (30,000
    )
    
    
    (55,518
    )Change in operating assets and liabilities:Accounts receivable
    
    
    295,369
    
    
    
    (318,195
    )Inventories
    
    
    (225,236
    )
    
    
    (357,346
    )Prepaid expenses
    
    
    (52,945
    )
    
    
    (347,778
    )Other assets
    
    
    (6,947
    )
    
    
    145Accounts payable and accrued liabilities
    
    
    (1,400,444
    )
    
    
    582,205Deferred revenue
    
    
    363,731
    
    
    
    895,787Net cash provided (used) by operating activities
    
    
    (583,408
    )
    
    
    840,377Cash flows from investing activities:Purchase of property and equipment
    
    
    (79,235
    )
    
    
    (25,920
    )Net cash used by investing activities
    
    
    (79,235
    )
    
    
    (25,920
    )Cash flows from financing activities:Net payments of lines of credit
    
    
    
    
    
    
    (100,000
    )Payments of long-term obligations
    
    
    (34,220
    )
    
    
    (129,235
    )Proceeds from the exercise of stock options
    
    
    56,124
    
    
    
    Net cash provided (used) by financing activities
    
    
    21,904
    
    
    
    (229,235
    )Effect of exchange rate changes on cash flows
    
    
    1,589
    
    
    
    1,192Net increase (decrease) in cash and cash equivalents
    
    
    (639,150
    )
    
    
    586,414Cash and cash equivalents, beginning of period
    
    
    6,368,885
    
    
    
    3,219,503Cash and cash equivalents, end of period
    
    $
    5,729,735
    
    
    $
    3,805,917
   - 5 -




---



##### Table of Contents



RBC LIFE SCIENCES, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note A  Unaudited Condensed Consolidated Financial Statements:
   Note B  Nature of Operations and Organization:
     - 6 -




---



##### Table of Contents



Note C  Inventories:
  March 31, 2008
    
    
    December 31, 2007Raw materials and bulk products
    
    $
    479,492
    
    
    $
    573,625Packaging materials
    
    
    520,408
    
    
    
    509,541Finished goods
    
    
    3,945,762
    
    
    
    3,642,206$
    4,945,662
    
    
    $
    4,725,372
 Note D  Prepaid Expenses:
  March 31, 2008
    
    
    December 31, 2007Advance payment to suppliers
    
    $
    256,604
    
    
    $
    179,844Prepaid insurance and other
    
    
    102,029
    
    
    
    126,116$
    358,633
    
    
    $
    305,960
 Note E  Property and Equipment:
  March 31, 2008
    
    
    December 31, 2007Building and improvements
    
    $
    3,363,556
    
    
    $
    3,314,482Computer software and office equipment
    
    
    1,588,685
    
    
    
    1,567,381Warehouse equipment
    
    
    341,850
    
    
    
    345,030Automotive equipment
    
    
    55,392
    
    
    
    55,392Leasehold improvements
    
    
    21,272
    
    
    
    22,1205,370,755
    
    
    
    5,304,405Less  accumulated depreciation
    
    
    (2,434,379
    )
    
    
    (2,367,543
    )2,936,376
    
    
    
    2,936,862Land
    
    
    1,141,173
    
    
    
    1,141,173$
    4,077,549
    
    
    $
    4,078,035
 Note F  Goodwill and Other Intangible Assets:
  March 31, 2008
    
    
    December 31, 2007Gross
    
    
    
    
    
    
    Grosscarrying
    
    
    Accumulated
    
    
    carrying
    
    
    Accumulatedvalue
    
    
    amortization
    
    
    value
    
    
    amortizationGoodwill
    
    $
    3,402,689
    
    
    $
    (1,121,384
    )
    
    $
    3,443,512
    
    
    $
    (1,141,286
    )
  - 7 -




---



##### Table of Contents



March 31, 2008
    
    
    December 31, 2007Average
    
    
    Gross
    
    
    
    
    
    
    Grosslife
    
    
    carrying
    
    
    Accumulated
    
    
    carrying
    
    
    Accumulated(years)
    
    
    value
    
    
    amortization
    
    
    value
    
    
    amortizationDistribution contracts
    
    
    8
    
    
    $
    277,369
    
    
    $
    (219,822
    )
    
    $
    277,369
    
    
    $
    (211,583
    )Copyrights,
trademarks and other
registrations
    
    
    19
    
    
    
    99,100
    
    
    
    (35,015
    )
    
    
    99,100
    
    
    
    (33,694
    )Other
    
    
    11
    
    
    
    47,600
    
    
    
    (28,077
    )
    
    
    47,600
    
    
    
    (27,034
    )$
    424,069
    
    
    $
    (282,914
    )
    
    $
    424,069
    
    
    $
    (272,311
    )
  Remainder of 2008
    
    $
    31,8042009
    
    
    24,0492010
    
    
    21,6262011
    
    
    13,7922012
    
    
    5,957Thereafter
    
    
    43,927Total
    
    $
    141,155
 Note G  Accrued Liabilities:
  March 31, 2008
    
    
    December 31, 2007Salaries and wages
    
    $
    451,499
    
    
    $
    850,855Income taxes
    
    
    217,858
    
    
    
    1,052,813Distributor commissions
    
    
    342,507
    
    
    
    362,900Sales and property taxes
    
    
    57,281
    
    
    
    57,908Interest
    
    
    14,839
    
    
    
    15,064Other
    
    
    161,911
    
    
    
    159,142$
    1,245,895
    
    
    $
    2,498,682
 Note H  Share-Based Compensation:
 Share-Based Payment
  - 8 -




---



##### Table of Contents



Quarters Ended March 31,2008
    
    
    2007(1)Weighted average expected life (years)
    
    
    9.0
    
    
    
    Risk-free interest rate
    
    
    3.77
    %
    
    
    Expected volatility
    
    
    138.57
    %
    
    
    Expected dividend yield
    
    
    0.0
    %
    
    
    
 
 (1)
    
    There were no option grants during this period. 
 Weighted-AverageWeighted-
    
    
    Remaining
    
    
    AggregateAverage Exercise
    
    
    Contractual Term
    
    
    IntrinsicOptions
    
    
    Price per Share
    
    
    (in years)
    
    
    ValueOutstanding on January 1, 2008
    
    
    3,494,950
    
    
    $
    0.32Granted
    
    
    100,000
    
    
    
    0.71Exercised
    
    
    (378,940
    )
    
    
    0.15Forfeited/canceled
    
    
    
    
    
    
    Outstanding on March 31, 2008
    
    
    3,216,010
    
    
    $
    0.35
    
    
    
    4.6
    
    
    $
    1,066,122Exercisable on March 31, 2008
    
    
    2,249,470
    
    
    $
    0.27
    
    
    
    3.5
    
    
    $
    886,717
 
 Weighted-AverageGrant Date FairShares
    
    
    Value per ShareNon-vested stock options at January 1, 2008
    
    
    866,540
    
    
    $
    0.50Non-vested stock options granted
    
    
    100,000
    
    
    
    0.69Vested stock options
    
    
    
    
    
    
    Forfeited stock options
    
    
    
    
    
    
    Non-vested stock options at March 31, 2008
    
    
    966,540
    
    
    
    0.52
   - 9 -




---



##### Table of Contents



Note I  Long-Term Obligations and Credit Lines:
  March 31, 2008
    
    
    December 31, 2007Mortgage 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
    
    $
    2,297,676
    
    
    $
    2,330,130Capital lease obligation
    
    
    
    
    
    
    1,7662,297,676
    
    
    
    2,331,896Less  current maturities
    
    
    (136,268
    )
    
    
    (135,428
    )$
    2,161,408
    
    
    $
    2,196,468
   Note J  Segments and Geographic Area:
    - 10 -




---



##### Table of Contents



Nutritional Products
    
    
    Medical Products
    
    
    ConsolidatedQuarter ended March 31, 2008Net sales
    
    $
    4,986
    
    
    $
    1,362
    
    
    $
    6,348Depreciation and amortization
    
    
    65
    
    
    
    24
    
    
    
    89Operating profit
    
    
    569
    
    
    
    43
    
    
    
    612Capital expenditures
    
    
    79
    
    
    
    
    
    
    
    79Total assets
    
    
    17,026
    
    
    
    1,446
    
    
    
    18,472Quarter ended March 31, 2007Net sales
    
    $
    4,360
    
    
    $
    1,032
    
    
    $
    5,392Depreciation and amortization
    
    
    72
    
    
    
    24
    
    
    
    96Operating profit
    
    
    466
    
    
    
    126
    
    
    
    592Capital expenditures
    
    
    26
    
    
    
    
    
    
    
    26Total assets
    
    
    13,575
    
    
    
    1,663
    
    
    
    15,238
  Quarter Ended March 31, 2008
    
    
    Quarter Ended March 31, 2007Net sales
    
    
    Long-Lived assets
    
    
    Net sales
    
    
    Long-Lived assetsDomestic
    
    $
    2,538
    
    
    $
    6,133
    
    
    $
    2,551
    
    
    $
    6,132Former Soviet Union
    
    
    3,376
    
    
    
    
    
    
    
    2,334
    
    
    
    Canada
    
    
    289
    
    
    
    572
    
    
    
    353
    
    
    
    509All others
    
    
    145
    
    
    
    
    
    
    
    154
    
    
    
    Totals
    
    $
    6,348
    
    
    $
    6,705
    
    
    $
    5,392
    
    
    $
    6,641
 Significant Customers
  Note K  Earnings Per Share:
  WeightedAverageNet Earnings
    
    
    Shares
    
    
    Per ShareQuarter ended March 31, 2008Basic earnings per common share
    
    $
    354,859
    
    
    
    21,114,437
    
    
    $
    0.02Effect of dilutive stock options
    
    
    
    
    
    
    1,458,243Diluted earnings per common share
    
    $
    354,859
    
    
    
    22,572,680
    
    
    $
    0.02Quarter ended March 31, 2007Basic earnings per common share
    
    $
    325,141
    
    
    
    20,188,294
    
    
    $
    0.02Effect of dilutive stock options
    
    
    
    
    
    
    1,368,258Diluted earnings per common share
    
    $
    325,141
    
    
    
    21,556,552
    
    
    $
    0.02
  - 11 -




---



##### Table of Contents



Note L  Comprehensive Income:
  Quarters Ended March 31,2008
    
    
    2007Net earnings
    
    $
    354,859
    
    
    $
    325,141Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    (23,311
    )
    
    
    7,134Comprehensive income
    
    $
    331,548
    
    
    $
    332,275
 Note M  Legal Proceedings:
   - 12 -




---



##### Table of Contents



ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
  FORWARD-LOOKING STATEMENTS
  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 U.S. and Canada, we distribute Nutritional Products directly
through a network of independent Associates. In certain other 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 U.S. to hospitals, nursing homes, clinics and pharmacies through
traditional medical/surgical supply dealers and pharmaceutical distributors. MPMs 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.
  - 13 -




---



##### Table of Contents



Quarters Ended March 31,2008
    
    
    2007(U.S. dollars in
000s)Nutritional Products:Associate network
    
    $
    1,465
    
    
    
    23
    %
    
    $
    1,873
    
    
    
    35
    %Licensees
    
    
    3,521
    
    
    
    56
    %
    
    
    2,487
    
    
    
    46
    %4,986
    
    
    
    79
    %
    
    
    4,360
    
    
    
    81
    %Medical Products
    
    
    1,362
    
    
    
    21
    %
    
    
    1,032
    
    
    
    19
    %$
    6,348
    
    
    
    100
    %
    
    $
    5,392
    
    
    
    100
    %
 Associate Network
 Quarters Ended March 31,2008
    
    
    2007United States
    
    
    80
    %
    
    
    81
    %Canada
    
    
    20
    
    
    
    19100
    %
    
    
    100
    %
  Licensees.
  Medical Products.
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    - 14 -




---



##### Table of Contents



RESULTS OF OPERATIONS
 Quarters Ended March 31,2008
    
    
    2007Net sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    44.8
    
    
    
    38.7Gross profit
    
    
    55.2
    
    
    
    61.3Operating expenses:General and administrative
    
    
    35.5
    
    
    
    36.5Distributor commissions
    
    
    8.8
    
    
    
    12.1Depreciation and amortization
    
    
    1.3
    
    
    
    1.7Total operating expenses
    
    
    45.6
    
    
    
    50.3Operating profit
    
    
    9.6
    
    
    
    11.0Interest expense
    
    
    0.7
    
    
    
    1.1Earnings before income taxes
    
    
    8.9
    
    
    
    9.9Provision for income taxes
    
    
    3.3
    
    
    
    3.9Net earnings
    
    
    5.6
    %
    
    
    6.0
    %
 Quarter ended March 31, 2008 compared with quarter ended March 31, 2007
 Net sales.
 Associate Network
 Licensees
 Medical products.
  - 15 -




---



##### Table of Contents



Cost of sales.
 General and administrative.
 Distributor commissions.
 Income taxes.
 Net earnings.
 LIQUIDITY AND CAPITAL RESOURCES
 Cash and working capital.
 Operating activities
 Investing activities.
 Financing activities
  - 16 -




---



##### Table of Contents



General liquidity and cash flows
 .
  
 ITEM 3. Quantitative and Qualitative Disclosure About Market Risk.
  Foreign exchange
  Interest rates
  
 ITEM 4. Controls and Procedures.
    - 17 -




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. Legal Proceedings.
  
 ITEM 1A. Risk Factors.
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 ITEM 3. Defaults Upon Senior Securities.
  
 ITEM 4. Submission of Matters to a Vote of Security Holders.
  
 ITEM 5. Other Information.
  
 ITEM 6. Exhibits.
   - 18 -




---



##### Table of Contents



SIGNATURES
  RBC Life Sciences, Inc.
RegistrantDate: May 9, 2008
    By:

/s/ Clinton H. HowardIts:      Chief Executive OfficerDate: May 9, 2008
    By:

/s/ Steven E. BrownIts:      Vice President-Finance andChief Financial Officer

(Principal Financial and Accounting Officer)  - 19 -




---



##### Table of Contents



RBC LIFE SCIENCES, INC.
 
 Exhibit Index
 Exhibit Number
    
    Description31.1
    
    
    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
  - 20 -