##### 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 June 30, 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)
    
    (IRS Employer Identification No.)
 2301 Crown Court, Irving, Texas
    
    75038(Address of principal executive offices)
    
    (Zip code)
 972-893-4000
  þ o
  o o þ
  o þ




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##### 



Page NumberPART I  FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial Statements (unaudited)
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    20Item 4.
    
    Controls and Procedures
    
    
    21PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    22Item 1A.
    
    Risk Factors
    
    
    22Item 2.
    
    Unregistered Sales of Equity Securities and  Use of Proceeds
    
    
    22Item 3.
    
    Defaults Upon Senior Securities
    
    
    22Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    22Item 5.
    
    Other Information
    
    
    22Item 6.
    
    Exhibits
    
    
    22Signatures
    
    
    
    
    23Exhibit Index
    
    
    
    
    24Certification of Principal Executive Officer - Section 302Certification of Principal Financial Officer - Section 302Certification of Principal Executive Officer - Section 906Certification of Principal Financial Officer - Section 906




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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
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,883,492
    
    
    $
    3,219,503Accounts receivable, net
    
    
    738,325
    
    
    
    331,834Inventories
    
    
    3,742,850
    
    
    
    2,651,082Deferred income taxes
    
    
    379,080
    
    
    
    231,680Prepaid expenses
    
    
    585,268
    
    
    
    499,267Total current assets
    
    
    9,329,015
    
    
    
    6,933,366Property and equipment, net
    
    
    3,514,061
    
    
    
    3,584,415Goodwill, net
    
    
    2,095,054
    
    
    
    2,095,054Intangible assets, net
    
    
    172,969
    
    
    
    194,173Other assets
    
    
    714,995
    
    
    
    708,187$
    15,826,094
    
    
    $
    13,515,195LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable, trade
    
    $
    1,834,464
    
    
    $
    850,143Accrued liabilities
    
    
    2,008,260
    
    
    
    1,165,247Current maturities of long-term obligations
    
    
    291,808
    
    
    
    379,635Line of credit
    
    
    
    
    
    
    100,000Deferred revenue
    
    
    2,384,622
    
    
    
    2,503,638Total current liabilities
    
    
    6,519,154
    
    
    
    4,998,663Long-term obligations, less current maturities
    
    
    2,408,695
    
    
    
    2,543,964Deferred income taxes
    
    
    492,529
    
    
    
    489,810Shareholders equity:Common stock, $0.001 par value; 50,000,000
shares authorized; 20,421,294 and 20,188,294 shares
issued and outstanding at June 30, 2007 and
December 31, 2006, respectively
    
    
    20,421
    
    
    
    20,188Additional paid-in capital
    
    
    12,987,642
    
    
    
    12,916,035Accumulated deficit
    
    
    (6,576,950
    )
    
    
    (7,412,250
    )Accumulated other comprehensive loss
    
    
    (25,397
    )
    
    
    (41,215
    )6,405,716
    
    
    
    5,482,758$
    15,826,094
    
    
    $
    13,515,195
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##### Table of Contents



RBC LIFE SCIENCES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the Quarters Ended June 30,2007
    
    
    2006Net sales
    
    $
    7,147,513
    
    
    $
    6,202,541Cost of sales
    
    
    3,354,181
    
    
    
    2,628,860Gross profit
    
    
    3,793,332
    
    
    
    3,573,681Operating expensesGeneral and administrative
    
    
    2,200,004
    
    
    
    2,126,067Distributor commissions
    
    
    643,263
    
    
    
    768,720Depreciation and amortization
    
    
    83,955
    
    
    
    161,917Total operating expenses
    
    
    2,927,222
    
    
    
    3,056,704Operating profit
    
    
    866,110
    
    
    
    516,977Interest expense
    
    
    53,951
    
    
    
    64,122Earnings before income taxes
    
    
    812,159
    
    
    
    452,855Provision for income taxes
    
    
    302,000
    
    
    
    160,000Net earnings
    
    $
    510,159
    
    
    $
    292,855Earnings per share:Basic
    
    $
    0.03
    
    
    $
    0.01Diluted
    
    
    0.02
    
    
    
    0.01Weighted average common shares outstanding:Basic
    
    
    20,265,961
    
    
    
    20,155,294Diluted
    
    
    22,498,525
    
    
    
    22,404,118
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##### Table of Contents



RBC LIFE SCIENCES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the Six Months Ended June 30,2007
    
    
    2006Net sales
    
    $
    12,539,565
    
    
    $
    11,011,440Cost of sales
    
    
    5,441,918
    
    
    
    4,181,591Gross profit
    
    
    7,097,647
    
    
    
    6,829,849Operating expensesGeneral and administrative
    
    
    4,166,860
    
    
    
    4,310,364Distributor commissions
    
    
    1,298,153
    
    
    
    1,652,535Depreciation and amortization
    
    
    174,173
    
    
    
    324,295Total operating expenses
    
    
    5,639,186
    
    
    
    6,287,194Operating profit
    
    
    1,458,461
    
    
    
    542,655Interest expense
    
    
    113,161
    
    
    
    128,438Earnings before income taxes
    
    
    1,345,300
    
    
    
    414,217Provision for income taxes
    
    
    510,000
    
    
    
    160,000Net earnings
    
    $
    835,300
    
    
    $
    254,217Earnings per share:Basic
    
    $
    0.04
    
    
    $
    0.01Diluted
    
    
    0.04
    
    
    
    0.01Weighted average common shares outstanding:Basic
    
    
    20,227,127
    
    
    
    20,149,794Diluted
    
    
    22,109,002
    
    
    
    22,491,663
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RBC LIFE SCIENCES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Six Months Ended June 30,2007
    
    
    2006Cash flows from operating activities:Net earnings
    
    $
    835,300
    
    
    $
    254,217Adjustment for non-cash items:Depreciation and amortization
    
    
    187,771
    
    
    
    331,627Stock-based compensation
    
    
    38,055
    
    
    
    49,989Deferred income taxes
    
    
    (140,000
    )
    
    
    160,000Change in operating assets and liabilitiesAccounts receivable
    
    
    (406,491
    )
    
    
    (5,011
    )Inventories
    
    
    (1,081,380
    )
    
    
    559,568Prepaid expenses
    
    
    (85,956
    )
    
    
    (288,143
    )Other assets
    
    
    (6,005
    )
    
    
    (221,433
    )Accounts payable and accrued liabilities
    
    
    1,815,285
    
    
    
    (277,185
    )Deferred revenue
    
    
    (119,016
    )
    
    
    270,394Net cash provided by operating activities
    
    
    1,037,563
    
    
    
    834,023Cash flows from investing activities:Purchase of property and equipment
    
    
    (92,673
    )
    
    
    (370,367
    )Net cash used by investing activities
    
    
    (92,673
    )
    
    
    (370,367
    )Cash flows from financing activities:Net payments of lines of credit
    
    
    (100,000
    )
    
    
    (1,374
    )Payments of long-term obligations
    
    
    (223,096
    )
    
    
    (60,576
    )Proceeds from the exercise of stock options
    
    
    33,785
    
    
    
    14,355Net cash used by financing activities
    
    
    (289,311
    )
    
    
    (47,595
    )Effect of exchange rate changes on cash flows
    
    
    8,410
    
    
    
    14,772Net increase in cash and cash equivalents
    
    
    663,989
    
    
    
    430,833Cash and cash equivalents, beginning of period
    
    
    3,219,503
    
    
    
    1,697,966Cash and cash equivalents, end of period
    
    $
    3,883,492
    
    
    $
    2,128,799
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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:
     - 7 -




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Note C  Inventories:
  June 30, 2007
    
    
    December 31, 2006Raw materials and bulk products
    
    $
    592,879
    
    
    $
    411,880Packaging materials
    
    
    527,564
    
    
    
    422,063Finished goods
    
    
    2,622,407
    
    
    
    1,817,139$
    3,742,850
    
    
    $
    2,651,082
 Note D  Prepaid Expenses:
  June 30, 2007
    
    
    December 31, 2006Advance payment to suppliers
    
    $
    416,698
    
    
    $
    368,536Prepaid insurance and other
    
    
    168,570
    
    
    
    130,731$
    585,268
    
    
    $
    499,267
 Note E  Property and Equipment:
  June 30, 2007
    
    
    December 31, 2006Building and improvements
    
    $
    2,775,109
    
    
    $
    2,775,109Computer software and office equipment
    
    
    2,223,761
    
    
    
    3,050,784Warehouse equipment
    
    
    301,504
    
    
    
    271,309Automotive equipment
    
    
    55,392
    
    
    
    55,392Leasehold improvements
    
    
    20,555
    
    
    
    18,7585,376,321
    
    
    
    6,171,352Less  accumulated depreciation
    
    
    (3,003,433
    )
    
    
    (3,728,110
    )2,372,888
    
    
    
    2,443,242Land
    
    
    1,141,173
    
    
    
    1,141,173$
    3,514,061
    
    
    $
    3,584,415
 Note F  Goodwill and Other Intangible Assets:
  June 30, 2007
    
    December 31, 2006Gross
    
    
    
    
    
    Grosscarrying
    
    Accumulated
    
    carrying
    
    Accumulatedvalue
    
    amortization
    
    value
    
    amortizationGoodwill
    
    $
    3,222,349
    
    
    $
    (1,127,295
    )
    
    $
    3,222,349
    
    
    $
    (1,127,295
    )
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June 30, 2007
    
    
    December 31, 2006Average
    
    
    Gross
    
    
    
    
    
    
    Grosslife
    
    
    carrying
    
    
    Accumulated
    
    
    carrying
    
    
    Accumulated(years)
    
    
    value
    
    
    amortization
    
    
    value
    
    
    amortizationDistribution contracts
    
    
    8
    
    
    $
    277,369
    
    
    $
    (195,100
    )
    
    $
    277,369
    
    
    $
    (178,625
    )Copyrights,
trademarks and other
registrations
    
    
    19
    
    
    
    99,100
    
    
    
    (31,051
    )
    
    
    99,100
    
    
    
    (28,409
    )Other
    
    
    11
    
    
    
    47,600
    
    
    
    (24,949
    )
    
    
    47,600
    
    
    
    (22,862
    )$
    424,069
    
    
    $
    (251,100
    )
    
    $
    424,069
    
    
    $
    (229,896
    )
  Remainder of 2007
    
    $
    21,2032008
    
    
    42,4072009
    
    
    24,0492010
    
    
    21,6262011
    
    
    13,791Thereafter
    
    
    49,893Total
    
    $
    172,969
 Note G  Accrued Liabilities:
  June 30, 2007
    
    
    December 31, 2006Salaries and wages
    
    $
    794,975
    
    
    $
    556,058Income taxes
    
    
    650,500
    
    
    
    Distributor commissions
    
    
    359,173
    
    
    
    415,474Sales and property taxes
    
    
    76,208
    
    
    
    73,060Interest
    
    
    17,562
    
    
    
    20,312Other
    
    
    109,842
    
    
    
    100,343$
    2,008,260
    
    
    $
    1,165,247
 Note H  Share-Based Compensation:
 Share-Based Payment
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Quarters ended June 30,
    
    Six Months Ended June 30,2007 (1)
    
    2006 (1)
    
    2007 (1)
    
    2006Expected life (years)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.0Risk-free interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.67
    %Expected volatility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135.0
    %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, 2007
    
    
    3,757,150
    
    
    $
    0.22Granted
    
    
    
    
    
    
    Exercised
    
    
    (233,000
    )
    
    
    0.15Forfeited/canceled
    
    
    (18,950
    )
    
    
    0.21Outstanding on June 30, 2007
    
    
    3,505,200
    
    
    $
    0.22
    
    
    
    4.7
    
    
    $
    1,553,325Exercisable on June 30, 2007
    
    
    2,549,850
    
    
    $
    0.24
    
    
    
    4.5
    
    
    $
    1,085,551
  Weighted-AverageGrant Date FairShares
    
    
    Value per ShareNon-vested stock options at January 1, 2007
    
    
    1,109,370
    
    
    $
    0.15Non-vested stock options granted
    
    
    
    
    
    
    Vested stock options
    
    
    (140,000
    )
    
    
    0.14Forfeited stock options
    
    
    (14,020
    )
    
    
    0.20Non-vested stock options at June 30, 2007
    
    
    955,350
    
    
    
    0.15
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Note I  Long-Term Obligations and Credit Lines:
  June 30, 2007
    
    
    December 31, 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
    
    $
    2,393,187
    
    
    $
    2,453,855Note payable to bank bearing interest at 7.96%,
payable in monthly installments of $12,550
through June 2009, collateralized by accounts
receivable, inventories and equipment, and
personally guaranteed by the Companys Chief
Executive Officer
    
    
    277,150
    
    
    
    339,848Convertible notes (original amount $730,000)
bearing interest at 10% payable quarterly,
originally due two years from the date of
issuance (1997), notes are convertible into
common stock any time prior to maturity at
the option of the holder based on a per share
conversion price of $1.32
    
    
    25,000
    
    
    
    121,500Capital lease obligation
    
    
    5,166
    
    
    
    8,3962,700,503
    
    
    
    2,923,599Less  current maturities
    
    
    (291,808
    )
    
    
    (379,635
    )$
    2,408,695
    
    
    $
    2,543,964
   Note J  Segments and Geographic Area:
   - 11 -




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Nutritional Products
    
    Medical Products
    
    ConsolidatedQuarter ended June 30, 2007Net sales
    
    $
    6,059
    
    
    $
    1,089
    
    
    $
    7,148Depreciation and amortization
    
    
    69
    
    
    
    23
    
    
    
    92Operating profit
    
    
    815
    
    
    
    51
    
    
    
    866Capital expenditures
    
    
    67
    
    
    
    
    
    
    
    67Total assets
    
    
    13,983
    
    
    
    1,843
    
    
    
    15,826Quarter ended June 30, 2006Net sales
    
    $
    5,297
    
    
    $
    906
    
    
    $
    6,203Depreciation and amortization
    
    
    152
    
    
    
    14
    
    
    
    166Operating profit
    
    
    368
    
    
    
    149
    
    
    
    517Capital expenditures
    
    
    16
    
    
    
    
    
    
    
    16Total assets
    
    
    11,691
    
    
    
    1,442
    
    
    
    13,133Six Months ended June 30, 2007Net sales
    
    $
    10,419
    
    
    $
    2,121
    
    
    $
    12,540Depreciation and amortization
    
    
    141
    
    
    
    47
    
    
    
    188Operating profit
    
    
    1,281
    
    
    
    177
    
    
    
    1,458Capital expenditures
    
    
    93
    
    
    
    
    
    
    
    93Total assets
    
    
    13,983
    
    
    
    1,843
    
    
    
    15,826Six Months ended June 30, 2006Net sales
    
    $
    9,361
    
    
    $
    1,650
    
    
    $
    11,011Depreciation and amortization
    
    
    305
    
    
    
    27
    
    
    
    332Operating profit
    
    
    341
    
    
    
    202
    
    
    
    543Capital expenditures
    
    
    370
    
    
    
    
    
    
    
    370Total assets
    
    
    11,691
    
    
    
    1,442
    
    
    
    13,133
  Quarter ended June 30, 2007
    
    
    Quarter ended June 30, 2006Net sales
    
    
    Long-Lived assets
    
    
    Net sales
    
    
    Long-Lived assetsDomestic
    
    $
    2,531
    
    
    $
    6,116
    
    
    $
    2,497
    
    
    $
    5,886Former Soviet Union
    
    
    4,081
    
    
    
    
    
    
    
    2,858
    
    
    
    Canada
    
    
    358
    
    
    
    381
    
    
    
    401
    
    
    
    389South Korea
    
    
    
    
    
    
    
    
    
    
    200
    
    
    
    557All others
    
    
    178
    
    
    
    
    
    
    
    247
    
    
    
    Totals
    
    $
    7,148
    
    
    $
    6,497
    
    
    $
    6,203
    
    
    $
    6,832
 Six Months ended June 30, 2007
    
    
    Six Months ended June 30, 2006Net sales
    
    
    Long-Lived assets
    
    
    Net sales
    
    
    Long-Lived assetsDomestic
    
    $
    5,081
    
    
    $
    6,116
    
    
    $
    5,040
    
    
    $
    5,886Former Soviet Union
    
    
    6,415
    
    
    
    
    
    
    
    4,125
    
    
    
    Canada
    
    
    711
    
    
    
    381
    
    
    
    870
    
    
    
    389South Korea
    
    
    
    
    
    
    
    
    
    
    429
    
    
    
    557All others
    
    
    333
    
    
    
    
    
    
    
    547
    
    
    
    Totals
    
    $
    12,540
    
    
    $
    6,497
    
    
    $
    11,011
    
    
    $
    6,832
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##### Table of Contents



Significant Customers
  Note K  Earnings Per Share:
  WeightedAverageNet Earnings
    
    
    Shares
    
    
    Per ShareQuarter ended June 30, 2007Basic earnings per common share
    
    $
    510,159
    
    
    
    20,265,961
    
    
    $
    0.03Effect of dilutive stock options
    
    
    
    
    
    
    2,232,564Diluted earnings per common share
    
    $
    510,159
    
    
    
    22,498,525
    
    
    $
    0.02Quarter ended June 30, 2006Basic earnings per common share
    
    $
    292,855
    
    
    
    20,155,294
    
    
    $
    0.01Effect of dilutive stock options
    
    
    
    
    
    
    2,248,824Diluted earnings per common share
    
    $
    292,855
    
    
    
    22,404,118
    
    
    $
    0.01Six Months ended June 30, 2007Basic earnings per common share
    
    $
    835,300
    
    
    
    20,227,127
    
    
    $
    0.04Effect of dilutive stock options
    
    
    
    
    
    
    1,881,875Diluted earnings per common share
    
    $
    835,300
    
    
    
    22,109,002
    
    
    $
    0.04Six Months ended June 30, 2006Basic earnings per common share
    
    $
    254,217
    
    
    
    20,149,794
    
    
    $
    0.01Effect of dilutive stock options
    
    
    
    
    
    
    2,341,869Diluted earnings per common share
    
    $
    254,217
    
    
    
    22,491,663
    
    
    $
    0.01
   Note L  Comprehensive Income:
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Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net earnings
    
    $
    510,159
    
    
    $
    292,855
    
    
    $
    835,300
    
    
    $
    254,217Other comprehensive income:Foreign currency
translation adjustment
    
    
    13,591
    
    
    
    28,167
    
    
    
    15,818
    
    
    
    30,619Comprehensive income
    
    $
    523,750
    
    
    $
    321,022
    
    
    $
    851,118
    
    
    $
    284,836
 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 four broad
categories: (i) wellness products, (ii) weight loss products, (iii) fitness products
and (iv) 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 and oncology 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.
  Quarters Ended June 30,2007
    
    
    2006(U.S. dollars in 000s)Nutritional Products:Associate network
    
    $
    1,801
    
    
    
    25
    %
    
    $
    2,193
    
    
    
    35
    %Licensees
    
    
    4,258
    
    
    
    60
    %
    
    
    3,104
    
    
    
    50
    %6,059
    
    
    
    85
    %
    
    
    5,297
    
    
    
    85
    %Medical Products
    
    
    1,089
    
    
    
    15
    %
    
    
    906
    
    
    
    15
    %$
    7,148
    
    
    
    100
    %
    
    $
    6,203
    
    
    
    100
    %
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Six Months Ended June 30,2007
    
    
    2006(U.S. dollars in 000s)Nutritional Products:Associate network
    
    $
    3,674
    
    
    
    29
    %
    
    $
    4,690
    
    
    
    43
    %Licensees
    
    
    6,745
    
    
    
    54
    %
    
    
    4,671
    
    
    
    42
    %10,419
    
    
    
    83
    %
    
    
    9,361
    
    
    
    85
    %Medical Products
    
    
    2,121
    
    
    
    17
    %
    
    
    1,650
    
    
    
    15
    %$
    12,540
    
    
    
    100
    %
    
    $
    11,011
    
    
    
    100
    %
 Associate Network
 Quarters Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006United States
    
    
    81
    %
    
    
    72
    %
    
    
    81
    %
    
    
    72
    %Canada
    
    
    19
    
    
    
    19
    
    
    
    19
    
    
    
    19South Korea
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    9100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Licensees.
  Medical Products.
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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RESULTS OF OPERATIONS
  Quarters Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    46.9
    
    
    
    42.4
    
    
    
    43.4
    
    
    
    38.0Gross profit
    
    
    53.1
    
    
    
    57.6
    
    
    
    56.6
    
    
    
    62.0Operating expenses:General and administrative
    
    
    30.8
    
    
    
    34.3
    
    
    
    33.2
    
    
    
    39.1Distributor commissions
    
    
    9.0
    
    
    
    12.4
    
    
    
    10.4
    
    
    
    15.0Depreciation and amortization
    
    
    1.2
    
    
    
    2.6
    
    
    
    1.4
    
    
    
    3.0Total operating expenses
    
    
    41.0
    
    
    
    49.3
    
    
    
    45.0
    
    
    
    57.1Operating profit
    
    
    12.1
    
    
    
    8.3
    
    
    
    11.6
    
    
    
    4.9Interest expense
    
    
    0.8
    
    
    
    1.0
    
    
    
    0.9
    
    
    
    1.1Earnings before income taxes
    
    
    11.3
    
    
    
    7.3
    
    
    
    10.7
    
    
    
    3.8Provision for income taxes
    
    
    4.2
    
    
    
    2.6
    
    
    
    4.0
    
    
    
    1.5Net earnings
    
    
    7.1
    %
    
    
    4.7
    %
    
    
    6.7
    %
    
    
    2.3
    %
 Quarter ended June 30, 2007 compared with quarter ended June 30, 2006
 Net sales.
 Associate Network
  Licensees
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Medical products.
 Cost of sales.
 General and administrative.
 Distributor commissions.
 Income taxes.
 Net earnings.
 Six months ended June 30, 2007 compared with six months ended June 30, 2006
 Net sales.
 Associate Network
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Licensees
 Medical products.
 Cost of sales.
 General and administrative.
 Distributor commissions.
 Income taxes.
 Net earnings.
 LIQUIDITY AND CAPITAL RESOURCES
 Cash and working capital.
 Operating activities
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Investing activities.
 Financing activities
 General liquidity and cash flows
 .
  
 ITEM 3. Quantitative and Qualitative Disclosure About Market Risk.
  Foreign exchange
  Interest rates
  - 20 -




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ITEM 4. Controls and Procedures.
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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.
  For
    
    WithheldSteven E. Brown
    
    
    18,523,186
    
    
    
    271,980J. Ike Guest
    
    
    18,523,186
    
    
    
    271,980Clinton H. Howard
    
    
    18,523,186
    
    
    
    271,980Wayne R. Holbrook
    
    
    18,523,186
    
    
    
    271,980Paul R. Miller
    
    
    18,523,186
    
    
    
    271,980Joseph P. Philipp
    
    
    18,523,186
    
    
    
    271,980Kenneth L. Sabot
    
    
    18,517,686
    
    
    
    277,480
 
 ITEM 5. Other Information.
  
 ITEM 6. Exhibits.
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SIGNATURES
  RBC Life Sciences, Inc.
RegistrantBy:
Its:
    
    /s/ Clinton H. Howard
Chief Executive OfficerBy:
Its:
    
    /s/ Steven E. Brown

Vice President-Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
 
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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
 - 24 -