##### 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, 2009
 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)2301 Crown Court, Irving, Texas
    
    75038(Address of principal executive offices)
    
    (Zip Code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
  Class
    
    Outstanding at April 15, 2009Common Stock, $0.001 par value per share
    
    21,921,934 shares




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##### 



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 Disclosures about Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    18PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults Upon Senior Securities
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    19Signatures
    
    
    20Exhibit Index
    
    
    21Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 RBC LIFE SCIENCES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    5,630,706
    
    
    $
    4,973,405Accounts receivable, net
    
    
    527,493
    
    
    
    465,311Inventories
    
    
    5,202,439
    
    
    
    5,706,613Deferred income taxes
    
    
    399,286
    
    
    
    405,286Prepaid expenses
    
    
    1,539,627
    
    
    
    1,374,805Total current assets
    
    
    13,299,551
    
    
    
    12,925,420Property and equipment, net
    
    
    4,735,874
    
    
    
    4,330,451Goodwill, net
    
    
    2,184,303
    
    
    
    2,197,082Intangible assets, net
    
    
    101,531
    
    
    
    109,347Other assets
    
    
    9,307
    
    
    
    203,816$
    20,330,566
    
    
    $
    19,766,116LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable, trade
    
    $
    1,817,779
    
    
    $
    1,961,579Accrued liabilities
    
    
    963,720
    
    
    
    1,266,167Current maturities of long-term obligations
    
    
    147,213
    
    
    
    144,397Deferred revenue
    
    
    5,449,534
    
    
    
    4,278,503Total current liabilities
    
    
    8,378,246
    
    
    
    7,650,646Long-term obligations, less current maturities
    
    
    2,014,195
    
    
    
    2,052,071Deferred income taxes
    
    
    693,567
    
    
    
    676,495Shareholders equity:Common stock, $0.001 par value; 50,000,000
shares authorized; 21,921,934 and 21,915,004 shares
issued and outstanding at March 31, 2009 and
December 31, 2008, respectively
    
    
    21,922
    
    
    
    21,915Additional paid-in capital
    
    
    13,400,481
    
    
    
    13,364,308Accumulated deficit
    
    
    (4,275,221
    )
    
    
    (4,104,241
    )Accumulated other comprehensive income
    
    
    97,376
    
    
    
    104,9229,244,558
    
    
    
    9,386,904$
    20,330,566
    
    
    $
    19,766,116
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##### Table of Contents



RBC LIFE SCIENCES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the Quarters Ended March 31,2009
    
    
    2008Net sales
    
    $
    6,015,878
    
    
    $
    6,347,691Cost of sales
    
    
    2,876,551
    
    
    
    2,844,902Gross profit
    
    
    3,139,327
    
    
    
    3,502,789Operating expenses:General and administrative
    
    
    2,576,996
    
    
    
    2,252,753Distributor commissions
    
    
    635,031
    
    
    
    557,647Depreciation and amortization
    
    
    88,175
    
    
    
    80,787Total operating expenses
    
    
    3,300,202
    
    
    
    2,891,187Operating profit (loss)
    
    
    (160,875
    )
    
    
    611,602Interest expense
    
    
    42,105
    
    
    
    44,743Earnings (loss) before income taxes
    
    
    (202,980
    )
    
    
    566,859Provision (benefit) for income taxes
    
    
    (32,000
    )
    
    
    212,000Net earnings (loss)
    
    $
    (170,980
    )
    
    $
    354,859Earnings (loss) per share:Basic
    
    $
    (0.01
    )
    
    $
    0.02Diluted
    
    
    (0.01
    )
    
    
    0.02Weighted average common shares outstanding:Basic
    
    
    21,917,314
    
    
    
    21,114,437Diluted
    
    
    21,917,314
    
    
    
    22,572,680
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RBC LIFE SCIENCES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Quarters Ended March 31,2009
    
    
    2008Cash flows from operating activities:Net earnings (loss)
    
    $
    (170,980
    )
    
    $
    354,859Adjustment for non-cash items:Depreciation and amortization
    
    
    99,807
    
    
    
    88,777Stock-based compensation
    
    
    34,725
    
    
    
    29,428Deferred income taxes
    
    
    21,400
    
    
    
    (30,000
    )Change in operating assets and liabilities:Accounts receivable
    
    
    (62,176
    )
    
    
    295,369Inventories
    
    
    500,212
    
    
    
    (225,236
    )Prepaid expenses
    
    
    (167,026
    )
    
    
    (52,945
    )Other assets
    
    
    
    
    
    
    (6,947
    )Accounts payable and accrued liabilities
    
    
    (443,406
    )
    
    
    (1,400,444
    )Deferred revenue
    
    
    1,171,032
    
    
    
    363,731Net cash provided by (used in) operating activities
    
    
    983,588
    
    
    
    (583,408
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (498,203
    )
    
    
    (79,235
    )Proceeds from surrender of insurance policy
    
    
    194,277
    
    
    
    Net cash used in investing activities
    
    
    (303,926
    )
    
    
    (79,235
    )Cash flows from financing activities:Payments of long-term obligations
    
    
    (35,061
    )
    
    
    (34,220
    )Proceeds from the exercise of stock options
    
    
    1,455
    
    
    
    56,124Net cash provided by (used in) financing activities
    
    
    (33,606
    )
    
    
    21,904Effect of exchange rate changes on cash flows
    
    
    11,245
    
    
    
    1,589Net increase (decrease) in cash and cash equivalents
    
    
    657,301
    
    
    
    (639,150
    )Cash and cash equivalents, beginning of period
    
    
    4,973,405
    
    
    
    6,368,885Cash and cash equivalents, end of period
    
    $
    5,630,706
    
    
    $
    5,729,735
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##### 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 -




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##### Table of Contents



Note C  Inventories:
  March 31, 2009
    
    
    December 31, 2008Raw materials and bulk products
    
    $
    264,667
    
    
    $
    384,376Packaging materials
    
    
    576,287
    
    
    
    584,842Finished goods
    
    
    4,361,485
    
    
    
    4,737,395$
    5,202,439
    
    
    $
    5,706,613
 Note D  Prepaid Expenses:
  March 31, 2009
    
    
    December 31, 2008Advance payment to suppliers
    
    $
    518,621
    
    
    $
    415,699Certificates of deposit  restricted
    
    
    567,431
    
    
    
    569,445Prepaid insurance and other
    
    
    453,575
    
    
    
    389,661$
    1,539,627
    
    
    $
    1,374,805
 Note E  Property and Equipment:
  March 31, 2009
    
    
    December 31, 2008Building and improvements
    
    $
    3,523,428
    
    
    $
    3,523,428Computer software and office equipment
    
    
    2,096,059
    
    
    
    1,625,205Warehouse equipment
    
    
    387,282
    
    
    
    367,285Automotive equipment
    
    
    15,228
    
    
    
    55,392Leasehold improvements
    
    
    17,340
    
    
    
    17,8586,039,337
    
    
    
    5,589,168Less  accumulated depreciation
    
    
    (2,444,636
    )
    
    
    (2,399,890
    )3,594,701
    
    
    
    3,189,278Land
    
    
    1,141,173
    
    
    
    1,141,173$
    4,735,874
    
    
    $
    4,330,451
 Note F  Goodwill and Other Intangible Assets:
  Gross Carrying Value
    
    
    Accumulated AmortizationBalance, December 31, 2008
    
    $
    3,238,342
    
    
    $
    (1,041,260
    )Currency translation adjustment
    
    
    (24,936
    )
    
    
    12,157Balance, March 31, 2009
    
    $
    3,213,406
    
    
    $
    (1,029,103
    )
  - 7 -




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##### Table of Contents



March 31, 2009
    
    
    December 31, 2008Average
    
    
    Gross
    
    
    
    
    
    
    GrossLife
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Accumulated(years)
    
    
    Value
    
    
    Amortization
    
    
    Value
    
    
    AmortizationDistribution contracts
    
    
    8
    
    
    $
    277,369
    
    
    $
    (249,989
    )
    
    $
    277,369
    
    
    $
    (244,536
    )Copyrights,
trademarks and other
registrations
    
    
    19
    
    
    
    99,100
    
    
    
    (40,300
    )
    
    
    99,100
    
    
    
    (38,979
    )Other
    
    
    11
    
    
    
    47,600
    
    
    
    (32,249
    )
    
    
    47,600
    
    
    
    (31,207
    )$
    424,069
    
    
    $
    (322,538
    )
    
    $
    424,069
    
    
    $
    (314,722
    )
  Remainder of 2009
    
    $
    16,2202010
    
    
    21,6262011
    
    
    13,7922012
    
    
    5,9572013
    
    
    5,957Thereafter
    
    
    37,979Total
    
    $
    101,531
 Note G  Accrued Liabilities:
  March 31, 2009
    
    
    December 31, 2008Salaries and wages
    
    $
    460,650
    
    
    $
    798,913Distributor commissions
    
    
    332,155
    
    
    
    297,570Sales and property taxes
    
    
    46,978
    
    
    
    32,759Interest
    
    
    13,959
    
    
    
    14,186Other
    
    
    109,978
    
    
    
    122,739$
    963,720
    
    
    $
    1,266,167
 Note H  Share-Based Compensation:
 Share-Based Payment
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Quarters Ended March 31,2009
    
    
    2008Weighted average expected life (years)
    
    
    9.0
    
    
    
    9.0Risk-free interest rate
    
    
    2.95
    %
    
    
    3.77
    %Expected volatility
    
    
    127.79
    %
    
    
    138.57
    %Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
  Weighted-AverageWeighted-
    
    
    Remaining
    
    
    AggregateAverage Exercise
    
    
    Contractual Term
    
    
    IntrinsicOptions
    
    
    Price per Share
    
    
    (in years)
    
    
    ValueOutstanding on January 1, 2009
    
    
    2,292,885
    
    
    $
    0.46Granted
    
    
    201,485
    
    
    
    0.53Exercised
    
    
    (6,930
    )
    
    
    0.21Forfeited/canceled
    
    
    (412,070
    )
    
    
    0.73Outstanding on March 31, 2009
    
    
    2,075,370
    
    
    $
    0.42
    
    
    
    6.0
    
    
    $
    223,484Exercisable on March 31, 2009
    
    
    1,081,145
    
    
    $
    0.24
    
    
    
    4.4
    
    
    $
    207,663
  Weighted-AverageGrant Date FairShares
    
    
    Value per ShareNon-vested stock options at January 1, 2009
    
    
    819,075
    
    
    $
    0.60Non-vested stock options granted
    
    
    200,000
    
    
    
    0.50Vested stock options
    
    
    (20,000
    )
    
    
    0.69Forfeited stock options
    
    
    (4,850
    )
    
    
    0.50Non-vested stock options at March 31, 2009
    
    
    994,225
    
    
    
    0.57
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##### Table of Contents



Note I  Long-Term Obligations and Credit Lines:
  March 31, 2009
    
    
    December 31, 2008Mortgage 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 Chairman of the Board of
Directors
    
    $
    2,161,408
    
    
    $
    2,196,468Less  current maturities
    
    
    (147,213
    )
    
    
    (144,397
    )$
    2,014,195
    
    
    $
    2,052,071
  Note J  Segments and Geographic Area:
      - 10 -




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Nutritional Products
    
    
    Medical Products
    
    
    ConsolidatedQuarter ended March 31, 2009Net sales
    
    $
    4,520
    
    
    $
    1,496
    
    
    $
    6,016Depreciation and amortization
    
    
    79
    
    
    
    21
    
    
    
    100Operating profit (loss)
    
    
    (205
    )
    
    
    44
    
    
    
    (161
    )Capital expenditures
    
    
    498
    
    
    
    
    
    
    
    498Total assets
    
    
    18,455
    
    
    
    1,876
    
    
    
    20,331Quarter 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
    
    
    
    18,472
  Quarter Ended March 31, 2009
    
    
    Quarter Ended March 31, 2008Net sales
    
    
    Long-Lived assets
    
    
    Net sales
    
    
    Long-Lived assetsDomestic
    
    $
    2,729
    
    
    $
    6,570
    
    
    $
    2,538
    
    
    $
    6,133Former Soviet Union
    
    
    2,998
    
    
    
    
    
    
    
    3,376
    
    
    
    Canada
    
    
    254
    
    
    
    461
    
    
    
    289
    
    
    
    572All others
    
    
    35
    
    
    
    
    
    
    
    145
    
    
    
    Totals
    
    $
    6,016
    
    
    $
    7,031
    
    
    $
    6,348
    
    
    $
    6,705
 Significant Customers
  Note K  Earnings (Loss) Per Share:
  WeightedAverageNet Earnings (Loss)
    
    
    Shares
    
    
    Per ShareQuarter ended March 31, 2009Basic loss per common share
    
    $
    (170,980
    )
    
    
    21,917,314
    
    
    $
    (0.01
    )Effect of dilutive stock options
    
    
    
    
    
    
    Diluted loss per common share
    
    $
    (170,980
    )
    
    
    21,917,314
    
    
    $
    (0.01
    )Quarter 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
    
    
    $
    0.02
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Note L  Comprehensive Income (Loss):
  Quarters Ended March 31,2009
    
    
    2008Net earnings (loss)
    
    $
    (170,980
    )
    
    $
    354,859Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    (7,546
    )
    
    
    (23,311
    )Comprehensive income (loss)
    
    $
    (178,526
    )
    
    $
    331,548
 Note M  Legal Proceedings:
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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 mainly 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 -




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##### Table of Contents



Quarters Ended March 31,2009
    
    
    2008(U.S. dollars in 000s)Nutritional Products:Associate network
    
    $
    1,487
    
    
    
    25
    %
    
    $
    1,465
    
    
    
    23
    %Licensees
    
    
    3,033
    
    
    
    50
    %
    
    
    3,521
    
    
    
    56
    %4,520
    
    
    
    75
    %
    
    
    4,986
    
    
    
    79
    %Medical Products
    
    
    1,496
    
    
    
    25
    %
    
    
    1,362
    
    
    
    21
    %$
    6,016
    
    
    
    100
    %
    
    $
    6,348
    
    
    
    100
    %
 Associate Network
 Quarters Ended March 31,2009
    
    
    2008U.S.
    
    
    83
    %
    
    
    80
    %Canada
    
    
    17
    
    
    
    20100
    %
    
    
    100
    %
  Licensees.
  Medical Products.
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   - 14 -




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RESULTS OF OPERATIONS
  Quarters Ended March 31,2009
    
    
    2008Net sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    47.8
    
    
    
    44.8Gross profit
    
    
    52.2
    
    
    
    55.2Operating expenses:General and administrative
    
    
    42.8
    
    
    
    35.5Distributor commissions
    
    
    10.6
    
    
    
    8.8Depreciation and amortization
    
    
    1.5
    
    
    
    1.3Total operating expenses
    
    
    54.9
    
    
    
    45.6Operating profit (loss)
    
    
    (2.7
    )
    
    
    9.6Interest expense
    
    
    0.7
    
    
    
    0.7Earnings (loss) before income taxes
    
    
    (3.4
    )
    
    
    8.9Provision (benefit) for income taxes
    
    
    (0.6
    )
    
    
    3.3Net earnings (loss)
    
    
    (2.8
    )%
    
    
    5.6
    %
 Quarter ended March 31, 2009 compared with quarter ended March 31, 2008
 Net earnings (loss).
 
    
    Gross profit generated by the increase in net sales in the Associate Network channel was
not sufficient to offset the expenses invested in this channel.
    
    Licensee sales declined mainly due to the timing of certain scheduled export shipments.
These shipments were originally scheduled for March 2009, but were delayed until April 2009
due to logistical factors.
 Net sales.
 Associate Network
 Licensees
  - 15 -




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Medical products.
 Cost of sales.
 General and administrative.
 Distributor commissions.
 Income taxes.
 LIQUIDITY AND CAPITAL RESOURCES
 Cash and working capital.
  - 16 -




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##### Table of Contents



Operating activities
 Investing activities.
 Financing activities
 General liquidity and cash flows .
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
  Foreign exchange
    - 17 -




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ITEM 4. Controls and Procedures.
    - 18 -




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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.
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SIGNATURES
  RBC Life Sciences, Inc.RegistrantMay 8, 2009
    
    
    
    By:
    
    /s/ John W. PriceDate
    
    
    
    
    
    Its:
    
    President and Chief Executive OfficerMay 8, 2009
    
    
    
    By:
    
    /s/ Steven E. BrownDate
    
    
    
    
    
    Its:
    
    Vice President-Finance andChief Financial Officer(Principal Financial and Accounting Officer)
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##### Table of Contents



RBC LIFE SCIENCES, INC.
 
 Exhibit Index
 ExhibitNo.
    
    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
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