UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





x             QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
quarterly period ended March 31, 2010





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.


(Exact
name of registrant as specified in its charter)





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)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.     Yes x     No  o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).     Yes o     No  o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer
              o
              Accelerated filer
              oNon-accelerated filer
              o  (Do not check if a smaller reporting company)
              Smaller reporting company
              x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act)     Yes o     No  x





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.





Class
                
                Outstanding at April 30,
    2010Common
      Stock, $0.001 par value per share
                
                21,921,934
      shares





TABLE OF
CONTENTS





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.
                        Reserved
                        19Item
      5.
                        Other
      Information
                        19Item
      6.
                        Exhibits
                        19Signatures
                        
                        
                        20Exhibit
      Index
                        
                        21





PART
1 – FINANCIAL INFORMATION





ITEM
      1.
            FINANCIAL
      STATEMENTS





RBC
LIFE SCIENCES, INC. and SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





March 31,
                  2010
                
                
                December 31,
                  2009(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                3,521,153
                
                
                $
                3,972,111Accounts
      receivable, net
                
                
                494,427
                
                
                
                576,125Inventories
                
                
                5,042,540
                
                
                
                5,344,259Deferred
      income taxes
                
                
                440,392
                
                
                
                449,254Prepaid
      expenses
                
                
                966,951
                
                
                
                888,303Total
      current assets
                
                
                10,465,463
                
                
                
                11,230,052Property
      and equipment, net
                
                
                4,955,525
                
                
                
                5,037,890Goodwill,
      net
                
                
                2,287,452
                
                
                
                2,271,977Intangible
      assets, net
                
                
                60,319
                
                
                
                61,808Other
      assets
                
                
                11,177
                
                
                
                10,897$
                17,779,936
                
                
                $
                18,612,624LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable, trade
                
                $
                1,527,712
                
                
                $
                1,803,997Accrued
      liabilities
                
                
                979,577
                
                
                
                925,060Current
      maturities of long-term obligations
                
                
                159,036
                
                
                
                155,994Deferred
      revenue
                
                
                2,849,320
                
                
                
                3,668,907Total
      current liabilities
                
                
                5,515,645
                
                
                
                6,553,958Long-term
      obligations, less current maturities
                
                
                1,855,159
                
                
                
                1,896,077Deferred
      income taxes
                
                
                944,084
                
                
                
                943,235Shareholders’
      equity:Common
      stock, $0.001 par value; 50,000,000 shares authorized; 21,921,934 shares
      issued and outstanding at March 31, 2010 and December 31,
    2009
                
                
                21,922
                
                
                
                21,922Additional
      paid-in capital
                
                
                13,538,086
                
                
                
                13,504,874Accumulated
      deficit
                
                
                (4,227,770
                )
                
                
                (4,439,094
                )Accumulated
      other comprehensive income
                
                
                132,810
                
                
                
                131,6529,465,048
                
                
                
                9,219,354$
                17,779,936
                
                
                $
                18,612,624





See notes
to condensed consolidated financial statements.


- 3
-


RBC
LIFE SCIENCES, INC. and SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)





For the Quarters Ended March 31,2010
                      
                      
                      2009Net
      sales
                      
                      $
                      6,981,530
                      
                      
                      $
                      6,015,878Cost
      of sales
                      
                      
                      3,592,735
                      
                      
                      
                      2,876,551Gross
      profit
                      
                      
                      3,388,795
                      
                      
                      
                      3,139,327Operating
      expenses:General
      and administrative
                      
                      
                      2,325,384
                      
                      
                      
                      2,576,996Distributor
      commissions
                      
                      
                      540,745
                      
                      
                      
                      635,031Depreciation
      and amortization
                      
                      
                      122,371
                      
                      
                      
                      88,175Total
      operating expenses
                      
                      
                      2,988,500
                      
                      
                      
                      3,300,202Operating
      profit (loss)
                      
                      
                      400,295
                      
                      
                      
                      (160,875
                      )Interest
      expense
                      
                      
                      39,271
                      
                      
                      
                      42,105Earnings
      (loss) before income taxes
                      
                      
                      361,024
                      
                      
                      
                      (202,980
                      )Provision
      (benefit) for income taxes
                      
                      
                      149,700
                      
                      
                      
                      (32,000
                      )Net
      earnings (loss)
                      
                      $
                      211,324
                      
                      
                      $
                      (170,980
                      )Earnings
      (loss) per share:Basic
                      
                      $
                      0.01
                      
                      
                      $
                      (0.01
                      )Diluted
                      
                      
                      0.01
                      
                      
                      
                      (0.01
                      )Weighted
      average common shares outstanding:Basic
                      
                      
                      21,921,934
                      
                      
                      
                      21,917,314Diluted
                      
                      
                      22,269,942
                      
                      
                      
                      21,917,314





See notes
to condensed consolidated financial statements.


- 4
-


RBC
LIFE SCIENCES, INC. and SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)





For the Quarters Ended March 31,2010
                
                
                2009Cash
      flows from operating activities:Net
      earnings (loss)
                
                $
                211,324
                
                
                $
                (170,980
                )Adjustment
      for non-cash items:Depreciation
      and amortization
                
                
                138,305
                
                
                
                99,807Stock-based
      compensation
                
                
                33,212
                
                
                
                34,725Deferred
      income taxes
                
                
                11,442
                
                
                
                21,400Change
      in operating assets and liabilities:Accounts
      receivable
                
                
                81,700
                
                
                
                (62,176
                )Inventories
                
                
                306,197
                
                
                
                500,212Prepaid
      expenses
                
                
                (76,011
                )
                
                
                (167,026
                )Accounts
      payable and accrued liabilities
                
                
                (224,282
                )
                
                
                (443,406
                )Deferred
      revenue
                
                
                (819,605
                )
                
                
                1,171,032Net
      cash provided by (used in) operating activities
                
                
                (337,718
                )
                
                
                983,588Cash
      flows from investing activities:Purchase
      of property and equipment
                
                
                (53,664
                )
                
                
                (498,203
                )Proceeds
      from surrender of insurance policy
                
                
                -
                
                
                
                194,277Net
      cash used in investing activities
                
                
                (53,664
                )
                
                
                (303,926
                )Cash
      flows from financing activities:Payments
      of long-term obligations
                
                
                (37,876
                )
                
                
                (35,061
                )Proceeds
      from the exercise of stock options
                
                
                -
                
                
                
                1,455Net
      cash used in financing activities
                
                
                (37,876
                )
                
                
                (33,606
                )Effect
      of exchange rate changes on cash flows
                
                
                (21,700
                )
                
                
                11,245Net
      increase (decrease) in cash and cash equivalents
                
                
                (450,958
                )
                
                
                657,301Cash
      and cash equivalents, beginning of period
                
                
                3,972,111
                
                
                
                4,973,405Cash
      and cash equivalents, end of period
                
                $
                3,521,153
                
                
                $
                5,630,706





See notes
to condensed consolidated financial statements.


- 5
-


RBC
LIFE SCIENCES, INC. AND SUBSIDIARIES





NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Note
A – Unaudited Condensed Consolidated Financial Statements:





The
accompanying unaudited condensed consolidated financial statements of RBC Life
Sciences, Inc. (sometimes hereinafter referred to collectively as “we”, “our”,
“RBC” or the “Company”) have been prepared in accordance with accounting
principles generally accepted in the U.S. (“US GAAP”) for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X.  Certain information and disclosures that are normally included
in financial statements prepared in accordance with US GAAP have been condensed
or omitted pursuant to these rules and regulations.  These unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2009 (the “2009 Form
10-K”), previously filed with the Securities and Exchange
Commission.





In the
opinion of management, all adjustments (consisting solely of normal recurring
accruals) considered necessary for a fair presentation of the Company’s results
for the interim periods have been included.  The preparation of
consolidated financial statements in conformity with US GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the consolidated financial statements and reported
amounts of revenues and expenses during the period.  Actual results
could differ from those estimates.  The results of operations for the
interim periods presented are not necessarily indicative of the results to be
expected for the full year.  Subsequent events were evaluated through
the issuance date of the consolidated financial statements.





Note
B – Nature of Operations and Organization:





The
Company is principally engaged in the marketing of nutritional supplements and
personal care products (collectively “Nutritional Products”) through
subsidiaries in the U.S. and Canada.  This product line is marketed
under the “RBC Life” brand name.  In certain markets, primarily the
U.S. and Canada, the Company markets its products through a network of
distributors that are referred to as “Associates.”  The Associates are
independent contractors who purchase products for personal use, purchase
products for resale to retail customers and sponsor other individuals as
Associates.  Accordingly, Associates can be product consumers
only  or they can also derive compensation both from the direct sales
of products and from sales generated by sponsored Associates.





RBC also
markets its Nutritional Products in certain international markets through
license arrangements.  The licensees are third parties who are granted
exclusive rights to distribute RBC products in their respective territories and,
for the most part, distribute these products through an independent Associate
network in the licensed territory.  Under these arrangements, the
independent Associate network in a licensed territory is compensated by the
licensee in accordance with a compensation plan similar to the one used by RBC
for its Associates in North America.





In
addition to its Nutritional Products, RBC also markets a line of wound care
products (“Medical Products”) under the MPM Medical brand name through a U.S.
subsidiary.  Medical Products are distributed primarily in the U.S. 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 and
oncology markets.


- 6
-


Note
C – Inventories:





Inventories
consist of the following:





March 31, 2010
                  
                  
                  December 31, 2009Raw
      materials and bulk products
                  
                  $
                  336,136
                  
                  
                  $
                  403,616Packaging
      materials
                  
                  
                  473,945
                  
                  
                  
                  488,545Finished
      goods
                  
                  
                  4,232,459
                  
                  
                  
                  4,452,098$
                  5,042,540
                  
                  
                  $
                  5,344,259





Note
D – Prepaid Expenses:





Prepaid
expenses consist of the following:





March 31, 2010
                  
                  
                  December 31, 2009Advance
      payment to suppliers
                  
                  $
                  324,589
                  
                  
                  $
                  177,415Prepaid
      income taxes
                  
                  
                  316,538
                  
                  
                  
                  453,177Certificates
      of deposit - restricted
                  
                  
                  83,691
                  
                  
                  
                  81,252Prepaid
      insurance and other
                  
                  
                  242,133
                  
                  
                  
                  176,459$
                  966,951
                  
                  
                  $
                  888,303





Note
E – Property and Equipment:





Property
and equipment consists of the following:





March 31, 2010
                  
                  
                  December 31, 2009Building
      and improvements
                  
                  $
                  3,523,428
                  
                  
                  $
                  3,523,428Computer
      software and office equipment
                  
                  
                  2,359,868
                  
                  
                  
                  2,314,849Warehouse
      equipment
                  
                  
                  304,282
                  
                  
                  
                  286,731Automotive
      equipment
                  
                  
                  15,228
                  
                  
                  
                  15,228Leasehold
      improvements
                  
                  
                  21,521
                  
                  
                  
                  20,8946,224,327
                  
                  
                  
                  6,161,130Less
      – accumulated depreciation
                  
                  
                  (2,409,975
                  )
                  
                  
                  (2,264,413
                  )3,814,352
                  
                  
                  
                  3,896,717Land
                  
                  
                  1,141,173
                  
                  
                  
                  1,141,173$
                  4,955,525
                  
                  
                  $
                  5,037,890





Note
F – Goodwill and Other Intangible Assets:





The
Company measures its goodwill for impairment at the end of each year or in the
event of an impairment indicator.  No impairment losses have been
recognized as a result of this testing.  Goodwill balances are
summarized as follows:





Gross Carrying Value
                      
                      
                      Accumulated AmortizationBalance,
      December 31, 2009
                      
                      $
                      3,384,487
                      
                      
                      $
                      (1,112,510
                      )Currency
      translation adjustment
                      
                      
                      30,197
                      
                      
                      
                      (14,722
                      )Balance,
      March 31, 2010
                      
                      $
                      3,414,684
                      
                      
                      $
                      (1,127,232
                      )


- 7
-


Other
intangible assets consist of the following:





March 31, 2010
                      
                      
                      December 31, 2009Average
                        Life
                        (years)
                      
                      
                      Gross
                        Carrying
                        Value
                      
                      
                      Accumulated
                        Amortization
                      
                      
                      Gross
                        Carrying
                        Value
                      
                      
                      Accumulated
                        AmortizationCopyrights,
      trademarks and other registrations
                      
                      19
                      
                      
                      $
                      99,100
                      
                      
                      $
                      (45,585
                      )
                      
                      $
                      99,100
                      
                      
                      $
                      (44,264
                      )Other
                      
                      19
                      
                      
                      
                      12,600
                      
                      
                      
                      (5,796
                      )
                      
                      
                      12,600
                      
                      
                      
                      (5,628
                      )$
                      111,700
                      
                      
                      $
                      (51,381
                      )
                      
                      $
                      111,700
                      
                      
                      $
                      (49,892
                      )




Amortization
expense related to other intangible assets totaled approximately $1,500 and
$7,800 for the quarters ended March 31, 2010 and 2009,
respectively  The aggregate estimated amortization expense for
intangible assets remaining as of March 31, 2010 is as follows:





Remainder
      of 2010
                  
                  $
                  4,4682011
                  
                  
                  5,9572012
                  
                  
                  5,9572013
                  
                  
                  5,9572014
                  
                  
                  5,957Thereafter
                  
                  
                  32,023Total
                  
                  $
                  60,319





Note
G – Accrued Liabilities:





Accrued
liabilities consist of the following:





March 31, 2010
                  
                  
                  December 31, 2009Salaries
      and wages
                  
                  $
                  496,914
                  
                  
                  $
                  436,916Distributor
      commissions
                  
                  
                  319,171
                  
                  
                  
                  317,562Sales
      and property taxes
                  
                  
                  39,580
                  
                  
                  
                  40,684Interest
                  
                  
                  13,008
                  
                  
                  
                  13,253Other
                  
                  
                  110,904
                  
                  
                  
                  116,645$
                  979,577
                  
                  
                  $
                  925,060





Note
H – Share-Based Compensation:





The
Company records compensation expense for all share-based payments based on the
estimated grant date fair value.  Share-based compensation expense for
the quarters ended March 31, 2010 and 2009 was approximately $33,200 and
$34,700, respectively.  Share-based compensation is classified as a
general and administrative expense.  There were no material tax
benefits related to this expense because virtually all share-based compensation
resulted from grants of incentive stock options.


- 8
-


The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:





Quarters Ended
                    March 31,2010(1)
                  
                  
                  2009Weighted
      average expected life (years)
                  
                  
                  —
                  
                  
                  
                  9.0Risk-free
      interest rate
                  
                  
                  —
                  
                  
                  
                  2.95
                  %Expected
      volatility
                  
                  
                  —
                  
                  
                  
                  127.79
                  %Expected
      dividend yield
                  
                  
                  —
                  
                  
                  
                  0.0
                  %










A summary
of stock option activity for the quarter ended March 31, 2010 is as
follows:




Options
                            
                            
                            Weighted-
                              Average Exercise
                              Price per Share
                            
                            
                            Weighted-Average
                              Remaining
                              Contractual Term
                              (in years)
                            
                            Aggregate
                              Intrinsic
                              ValueOutstanding
      on January 1, 2010
                            
                            
                            2,130,440
                            
                            
                            $
                            0.40Granted
                            
                            
                            -
                            
                            
                            
                            -Exercised
                            
                            
                            -
                            
                            
                            
                            -Forfeited/canceled
                            
                            
                            (3,170
                            )
                            
                            
                            0.32Outstanding
      on March 31, 2010
                            
                            
                            2,127,270
                            
                            
                            $
                            0.40
                            
                            
                            
                            5.0
                            
                            
                            $
                            124,256Exercisable
      on March 31, 2010
                            
                            
                            1,325,520
                            
                            
                            $
                            0.29
                            
                            
                            
                            4.1
                            
                            
                            $
                            120,700




A summary
of the status of the Company’s non-vested stock options as of March 31, 2010 and
changes during the three months then ended are presented
below:




Weighted-AverageGrant Date FairShares
                      
                      
                      Value per ShareNon-vested
      stock options at January 1, 2010
                      
                      
                      871,750
                      
                      
                      $
                      0.55Non-vested
      stock options granted
                      
                      
                      -
                      
                      
                      
                      -Vested
      stock options
                      
                      
                      (70,000)
                      
                      
                      
                      0.56Forfeited
      stock options
                      
                      
                      -
                      
                      
                      
                      -Non-vested
      stock options at March 31, 2010
                      
                      
                      801,750
                      
                      
                      
                      0.55




As of
March 31, 2010, there was approximately $399,000 of total unrecognized
compensation cost related to stock option grants.


- 9
-


Note
I – Long-Term Obligations and Credit Lines:





At March
31, 2010 and December 31, 2009 long-term obligations consist of the
following:




March 31, 2010
                        
                        
                        December 31, 2009Mortgage
      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
                        
                        $
                        2,014,195
                        
                        
                        $
                        2,052,071Less
      – current maturities
                        
                        
                        (159,036
                        )
                        
                        
                        (155,994
                        )$
                        1,855,159
                        
                        
                        $
                        1,896,077




The fair
value of long-term debt is estimated based on interest rates for the same or
similar instruments offered having the same or similar maturities and collateral
requirements.  At March 31, 2010, the fair value of fixed-rate
long-term debt was $2,151,000, which was $137,000 above the carrying value of
$2,014,000.  At December 31, 2009, the fair value of fixed-rate
long-term debt was $2,139,000, which was $87,000 above the carrying value of
$2,052,000.





Note
J – Segments and Geographic Area:





The
Company's segments are based on the organization structure that is used by
management for making operating and investment decisions and for assessing
performance.  Based on this management approach, the Company has two
operating segments: Nutritional Products and Medical Products.





The
Nutritional Products segment manufactures and distributes a line of over 75
nutritional supplements and personal care products, including herbs, vitamins
and minerals, as well as natural skin, hair and body care
products.  Nutritional Products are marketed under the “RBC Life”
brand name through subsidiaries in the U.S. and Canada.  These
products are distributed by a network of independent Associates in certain
markets, primarily the U.S. and Canada, and by licensees in certain other
international markets.  For the most part, licensees also market the
Nutritional Products in their respective territories through a network of
independent Associates.





The
Medical Products segment markets a line of approximately 28 wound care products
under the MPM Medical brand name through a U.S. subsidiary operating primarily
in the U.S.  The wound care products are distributed to hospitals,
nursing homes, home health care agencies, clinics and pharmacies through a
network of 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 and
oncology markets.





The
Company evaluates the performance of its segments primarily based on operating
profit.  All intercompany transactions have been eliminated, and
intersegment revenues are not significant.  In calculating operating
profit for these two segments, administrative expenses incurred that are common
to the two segments are allocated on a usage basis.


- 10
-


Segment
information is as follows (in thousands):





Nutritional Products
                    
                    
                    Medical Products
                    
                    
                    ConsolidatedQuarter
      Ended March 31, 2010Net
      sales
                    
                    $
                    5,414
                    
                    
                    $
                    1,568
                    
                    
                    $
                    6,982Depreciation
      and amortization
                    
                    
                    117
                    
                    
                    
                    21
                    
                    
                    
                    138Operating
      profit
                    
                    
                    369
                    
                    
                    
                    31
                    
                    
                    
                    400Capital
      expenditures
                    
                    
                    54
                    
                    
                    
                    -
                    
                    
                    
                    54Total
      assets
                    
                    
                    15,126
                    
                    
                    
                    2,654
                    
                    
                    
                    17,780Quarter
      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
                    
                    
                    
                    20,331





Financial
information summarized geographically for the quarters ended March 31, 2010 and
2009 is listed below (in thousands):





Quarter Ended March 31, 2010
                  
                  
                  Quarter Ended March 31, 2009Net sales
                  
                  
                  Long-Lived assets
                  
                  
                  Net sales
                  
                  
                  Long-Lived assetsDomestic
                  
                  $
                  2,599
                  
                  
                  $
                  6,747
                  
                  
                  $
                  2,729
                  
                  
                  $
                  6,570Russia/Eastern
      Europe
                  
                  
                  3,971
                  
                  
                  
                  -
                  
                  
                  
                  2,998
                  
                  
                  
                  -Canada
                  
                  
                  230
                  
                  
                  
                  567
                  
                  
                  
                  254
                  
                  
                  
                  461All
      others
                  
                  
                  182
                  
                  
                  
                  -
                  
                  
                  
                  35
                  
                  
                  
                  -Totals
                  
                  $
                  6,982
                  
                  
                  $
                  7,314
                  
                  
                  $
                  6,016
                  
                  
                  $
                  7,031





Significant
Customers





The
Company recorded sales of Nutritional Products to Coral Club International,
Inc., a licensee of the Company, in the amounts of $3,971,000 and $2,998,000
during the quarters ended March 31, 2010 and 2009.  The Company also
recorded sales of Medical Products to a medical/surgical dealer in the amounts
of $1,021,000 and $1,017,000 during the quarters ended March 31, 2010 and 2009,
respectively.  These sales accounted for more than 10% of net sales in
these periods.  In no other case did a customer of the Company account
for more than 10% of net sales during the quarters ended March 31, 2010 and
2009.





Note
K – Earnings (Loss) Per Share:





Summarized
basic and diluted earnings (loss) per common share were calculated as
follows:





Net Earnings (Loss)
                      
                      
                      Weighted
                        Average
                        Shares
                      
                      
                      Per ShareQuarter
      Ended March 31, 2010Basic
      earnings per common share
                      
                      $
                      211,324
                      
                      
                      
                      21,921,934
                      
                      
                      $
                      0.01Effect
      of dilutive stock options
                      
                      
                      -
                      
                      
                      
                      348,008Diluted
      earnings per common share
                      
                      $
                      211,324
                      
                      
                      
                      22,269,942
                      
                      
                      $
                      0.01Quarter
      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
                      )


- 11
-


The
number of stock options that were outstanding, but not included in the
computation of diluted earnings (loss) per common share because their exercise
price was greater than the average market price of the common stock, or were
otherwise anti-dilutive, was 1,120,426 and 2,075,370 for the quarters ended
March 31, 2010 and 2009, respectively.





Note
L – Comprehensive Income (Loss):





Comprehensive
income (loss) is net earnings adjusted for other comprehensive income (loss),
which, for the periods presented, consists of the change in the foreign currency
translation adjustment.  The following table provides information
regarding comprehensive income (loss):





Quarters Ended
                              March 31,2010
                            
                            
                            2009Net
      earnings (loss)
                            
                            $
                            211,324
                            
                            
                            $
                            (170,980
                            )Other
      comprehensive income (loss):Foreign
      currency translation adjustment
                            
                            
                            1,158
                            
                            
                            
                            (7,546
                            )Comprehensive
      income (loss)
                            
                            $
                            212,482
                            
                            
                            $
                            (178,526
                            )





Note
M – Legal Proceedings:





The
Company is from time to time engaged in routine litigation.  The
Company regularly reviews all pending litigation matters in which it is involved
and establishes reserves deemed appropriate by management for these litigation
matters.


- 12
-


ITEM
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results ofOperations.





The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the unaudited condensed
consolidated financial statements and notes thereto included elsewhere in this
report and the audited consolidated financial statements and notes thereto
included in the 2009 Form 10-K.





FORWARD-LOOKING
STATEMENTS




The
statements, other than statements of historical or present facts, included in
this report are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934.  All statements, other than statements of historical or present
facts, that address activities, events, outcomes and other matters that we plan,
expect, intend, assume, believe, budget, predict, forecast, project, estimate or
anticipate (and other similar expressions) will, should or may occur in the
future are forward-looking statements.  Forward-looking statements can
be identified by the use of the words “may,” “will,” “expect,” “intend,”
“estimate,” “anticipate,” “objective,” “projection,” forecast,” “goal,”
“believe,” and similar expressions.  These forward-looking statements
are based on management’s current belief, based on currently available
information, as to the outcome and time of future events.  We believe
that the expectations and assumptions reflected in these forward-looking
statements are reasonable.  However, we cannot assure you that such
expectations will occur.  Our actual future performance could differ
materially from such statements.  When considering forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements in this Form 10-Q and those previously disclosed in Item 1A to Part I
of the 2009 Form 10-K.  Many of these factors are beyond the Company’s
ability to control or predict. We caution you not to put undue reliance on forward-looking statements or to project any future results based on
such statements or on present or prior earnings levels. We do not undertake any
obligation to publicly release any revisions to any forward-looking statement to
reflect events or circumstances after the date of this report or to reflect the
occurrence of unanticipated events.  Please consider our
forward-looking statements in light of those risks as you read this
report.





OVERVIEW




We
operate in two industry segments, Nutritional Products and Medical
Products.




·
            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.  Medical Products are used to prevent and treat
      wounds, and manage pain associated with wounds, in the acute care,
      long-term care and oncology
markets.


- 13
-




Consolidated
net sales in dollars and as a percentage of consolidated net sales are as
follows:





Quarters
      Ended March 31,2010
                    
                    
                    2009(U.S.
      dollars in 000’s)Nutritional
      Products:Licensees
                    
                    $
                    4,153
                    
                    
                    
                    60
                    %
                    
                    $
                    3,033
                    
                    
                    
                    50
                    %Associate
      network
                    
                    
                    1,261
                    
                    
                    
                    18
                    %
                    
                    
                    1,487
                    
                    
                    
                    25
                    %5,414
                    
                    
                    
                    78
                    %
                    
                    
                    4,520
                    
                    
                    
                    75
                    %Medical
      Products
                    
                    
                    1,568
                    
                    
                    
                    22
                    %
                    
                    
                    1,496
                    
                    
                    
                    25
                    %$
                    6,982
                    
                    
                    
                    100
                    %
                    
                    $
                    6,016
                    
                    
                    
                    100
                    %





Licensees. Our highest
revenue distribution channel is the licensee channel.  In this channel
we sell Nutritional Products to third parties who purchase products from us in
accordance with a license arrangement that gives the licensee exclusive rights
to distribute our products in the licensed territory. For the most part,
licensees are required to distribute our products in the licensed territory
through network marketing. Net sales in this distribution channel are mainly
dependent upon the licensee’s success in building a distribution network in the
licensed territory.




Our
principal licensee is Coral Club International (“CCI”). CCI, which accounted for
96% and 99% of licensee net sales in the quarters ended March 31, 2010 and 2009,
respectively, distributes products in a territory comprised mainly of Russia and
Eastern Europe. The President of CCI is a former member of our Board of
Directors and beneficially owns approximately 18% of our outstanding common
stock.





Net sales
in this channel increased $1,120,000, or 37%, for the quarter ended March 31,
2010 compared with net sales for the same period in 2009.  This
increase was mainly related to an increase in net sales to CCI.  Net
sales to CCI increased $973,000, or 32%, for the quarter ended March 31, 2010
compared with net sales for the same period in 2009.  CCI’s sales in
2009 were negatively affected by the global economic recession; accordingly, it
significantly reduced its purchases from us in 2009 to reduce inventory
levels.  We believe that CCI completed this inventory reduction
process during the fourth quarter of 2009 and, as a result, increased its
shipping requests to maintain rather than reduce its inventory.  Net
sales in this channel represented 60% of consolidated net sales in the first
quarter of 2010, which compares to 51%, 60% and 58% for years ended December 31,
2009, 2008 and 2007, respectively.





Under our
arrangement with CCI, CCI orders products from us and pays for them when we
segregate them in our warehouse for CCI’s account. Once segregated, products are
not subject to return except in the case of a manufacturing
defect.  We store the products until CCI provides shipping
instructions.  Because we do not recognize revenue until we ship
products to CCI, our sales to CCI fluctuate from quarter to quarter depending on
a number of logistical considerations, only one of which is the sales demand of
CCI’s Associate network.  Backlog related to CCI’s account was
$6,434,000 at March 31, 2010 compared to $7,421,000 at March 31,
2009.





Associate
Network.  The following table sets forth the Associate network
net sales by geographic region as a percentage of total net sales for the
periods indicated:





Quarters
      Ended
                              March
      31,2010
                            
                            2009United
      States
                            
                            
                            82
                            %
                            
                            
                            83
                            %Canada
                            
                            
                            18
                            
                            
                            
                            17100
                            %
                            
                            
                            100
                            %


- 14
-





Net sales
through the Associate network channel decreased approximately 15% during the
first quarter of 2010 compared to the same period in 2009.  This
decrease was primarily attributable to a decrease in the rate of sponsorship of
new Associates by the current Associate network in the North American market and
increased Associate attrition. Sponsorship in the first quarter of 2009 was
positively affected by the activities of a group of new Associates that enrolled
with the Company in late 2008.  The sponsoring activities of this
group began to decline in the fourth quarter of 2009; accordingly, the rate of
sponsorship in the first quarter of 2010 declined significantly. Sales in this
channel are dependent upon the number and productivity of our
Associates.  Accordingly, growth in sales is dependent upon the
sponsorship of new Associates and retention of existing
Associates.  During the first quarter of 2010, we undertook a number
of marketing and sales initiatives in an effort to reverse these unfavorable
trends.  However, no assurance can be given that these initiatives
will increase the rate of sponsorship of new Associates or reduce Associate
attrition.




Medical Products. We sell
Medical Products primarily in the U.S. to wholesalers such as medical/surgical
dealers and pharmaceutical distributors. These wholesalers supply various health
care providers such as hospitals, nursing homes, clinics and pharmacies. In some
cases, wholesalers maintain their own sales forces to market products that they
supply, which include our products.




This
segment’s largest customer, a medical/surgical dealer, accounted for 65% and 68%
of Medical Products net sales during the quarters ended March 31, 2010 and 2009,
respectively.




CRITICAL
ACCOUNTING POLICIES AND ESTIMATES




The
preparation of our financial statements and related disclosures in conformity
with US GAAP requires us to make estimates and judgments that affect the amounts
reported in our financial statements and accompanying footnotes. On an on-going
basis, we evaluate these estimates and assumptions based on historical
experience and various other factors and circumstances. Our management believes
that the estimates and assumptions are reasonable in the circumstances; however,
actual results may vary from these estimates and assumptions under different
future circumstances.




Management
believes that there have been no significant changes during the quarter ended
March 31, 2010 to the items that we disclosed as our critical accounting
policies and estimates in Management’s Discussion and Analysis of Financial
Condition and Results of Operations in the 2009 Form 10-K.





RESULTS
OF OPERATIONS




The
following table sets forth our operating results as a percentage of net sales
for the periods indicated:





Quarters
      Ended March 31,2010
                              
                              
                              2009Net
      sales
                              
                              
                              100.0
                              %
                              
                              
                              100.0
                              %Cost
      of sales
                              
                              
                              51.5
                              
                              
                              
                              47.8Gross
      profit
                              
                              
                              48.5
                              
                              
                              
                              52.2Operating
      expenses:General
      and administrative
                              
                              
                              33.3
                              
                              
                              
                              42.8Distributor
      commissions
                              
                              
                              7.7
                              
                              
                              
                              10.6Depreciation
      and amortization
                              
                              
                              1.8
                              
                              
                              
                              1.5Total
      operating expenses
                              
                              
                              42.8
                              
                              
                              
                              54.9Operating
      profit (loss)
                              
                              
                              5.7
                              
                              
                              
                              (2.7
                              )Interest
      expense
                              
                              
                              0.5
                              
                              
                              
                              0.7Earnings
      (loss) before income taxes
                              
                              
                              5.2
                              
                              
                              
                              (3.4
                              )Provision
      (benefit) for income taxes
                              
                              
                              2.2
                              
                              
                              
                              (0.6
                              )Net
      earnings (loss)
                              
                              
                              3.0
                              %
                              
                              
                              (2.8
                              )
      %





Quarter
ended March 31, 2010 compared with quarter ended March 31, 2009 (000’s except
per share amounts)




Net sales.Net sales for the
quarter ended March 31, 2010 were $6,982 compared with net sales for the same
period in 2009 of $6,016, an increase of $966 or 16%.  The increase in
net sales resulted from an $894 increase in net sales of Nutritional Products
and a $72 increase in net sales of Medical Products. Net sales of Nutritional
Products to our licensees increased $1,120 while net sales of Nutritional
Products to our Associate network decreased $226.


- 15
-





Licensees.  Net
sales to our licensees increased primarily as a result of increased shipments to
CCI. While sales to CCI can vary from quarter to quarter due to various
logistical factors, sometimes significantly, irrespective of the sales demand of
CCI’s Associate network, sales of our products to CCI increased $973 during the
first quarter of 2010 as described above under the caption
Overview-Licensees.





Associate
Network.  Net sales in the North American market declined
approximately $226, or 15%, during the quarter ended March 31,
2010.  This decline resulted from a reduced rate of sponsorship of new
Associates and increased Associate attrition as described above under the
caption Overview-Associate Network.




Medical products.  The
growth in net sales in this segment is related to an increase in the customer
base for our wound care products.  Sales to the largest customer in
this segment, which accounted for approximately 65% of Medical Products segment
sales, remained almost unchanged, increasing $4 to $1,021 during the first
quarter of 2010 compared to the first quarter of 2009.





Cost of sales.  Cost
of sales for the quarter ended March 31, 2010 was $3,593 compared with cost of
sales in the first quarter of 2009 of $2,877, an increase of $716 or 25%. As a
percentage of net sales, cost of sales was 52% in the first quarter of 2010 and
48% in the first quarter of 2009. As a percentage of net sales, gross profit
decreased 4% mainly because of a change in sales mix, which was weighted more
toward sales to licensees in the first quarter of 2010 than it was in the first
quarter of 2009. Gross profit margins for products sold to licensees are lower
than gross profit margins for products sold in other channels because licensees
are responsible to pay commissions and incur expenses related to product
marketing and distribution in the licensed territory, in contrast to our other
sales channels where we bear those expenses.





General and administrative.
General and administrative expenses for the quarter ended March 31, 2010, were
$2,325 compared with expenses in the first quarter of 2009 of $2,577, a decrease
of $252.  As a percentage of net sales, general and administrative
expenses decreased to 33% in the first quarter of 2010 compared with the 43% in
the first quarter of 2009.  The decrease in general and administrative
expenses in the first quarter of 2010 was attributed primarily to lower
marketing and sales expenses, particularly with respect to the Associate network
channel, and lower facility maintenance and repair expenses.





Distributor commissions.
Distributor commissions were $541 for the quarter ended March 31, 2010 compared
with distributor commissions of $635 in the first quarter of 2009, a decrease of
$94 or 15%.  This decrease resulted from lower sales to the Associate
network.  With regard to the Associate network, distributor
commissions as a percentage of commissionable sales, exclusive of rebates, which
are recorded as a reduction of sales, increased to approximately 41% in the
first quarter of 2010 compared to 37% in the same period in
2009.  This increase in distributor commissions as a percentage of
commissionable sales primarily resulted from a new Associate compensation plan
that became effective for the entire Associate network in September
2009.  Under the new Associate compensation plan, the portion of sales
incentives classified as rebates decreased while the portion of sales incentives
classified as distributor commissions expense increased.  On a
consolidated basis, distributor commissions as a percentage of net sales were 8%
and 11% in the first quarter of 2010 and 2009, respectively.




Income taxes.We
recorded a provision for income taxes of $150 during the quarter ended March 31,
2010 and a benefit for income taxes of $32 for the quarter ended March 31, 2009
based on our estimate of the effective annual income tax rate for the applicable
period.





Net earnings
(loss).  As a result of the factors described above, net
earnings for the quarter ended March 31, 2010 were $211, or $0.01 per share,
compared with a net loss in the first quarter of 2009 of $171, or $0.01 per
share.


- 16
-


LIQUIDITY
AND CAPITAL RESOURCES (000’s)




Cash and working capital. At
March 31, 2010, all of our cash and cash equivalents were maintained in accounts
that were either insured or secured by federal government
agencies.  During the quarter ended March 31, 2010, we had a net
decrease in cash of $451 compared with a net increase in cash of $657 in the
first quarter of 2009.  At March 31, 2010, we had working capital of
$4,950 a $274 increase from working capital at December 31, 2009 of
$4,676.   The reasons for these changes in cash and working
capital are described below.




Operating activities. In the
first quarter of 2010, our operating activities used cash flows of
$338.  In the first quarter of 2009, our operating activities provided
cash flows of $984.  The primary use of cash by operating activities
during the first quarter of 2010 related to an $820 decrease in deferred
revenue.  This decrease in deferred revenue was related to the timing
of transactions with CCI.  The balance of deferred revenue at any
point in time is mainly dependent upon the timing of new CCI order deposits and
the length of time we hold CCI’s products prior to shipment.  In the
first quarter of 2010, net earnings adjusted for non-cash activities, which
include depreciation and amortization, stock-based compensation and deferred
income taxes, provided cash flows of $394 compared with using cash flows of $15
in the first quarter of 2009.




Investing activities.During
the first quarter of 2010, we used cash of $54 to purchase property and
equipment, most of which was for use in our warehouse or quality control
laboratory.




Financing activities. The
principle financing activity during the first quarter of 2010 was the repayment
of long-term debt in the amount of $38.





General liquidity and cash
flows. We believe that the working capital requirements of our existing
operations can be met through available cash and cash generated from operating
activities for the foreseeable future; however, an overall decrease in demand
for our products could adversely affect our liquidity. In the event of a
significant decrease in cash provided by our operating activities, we may seek
outside sources of capital including bank borrowings or other types of debt or
equity financings. We can give no assurance, however, that we would be able to
obtain any additional outside financing or obtain financing on terms we would
find acceptable.  We have no plans or requirements for any significant
capital expenditures during the next 12 months.





Other
than those factors already described, we are not aware of any trends or
uncertainties that would significantly affect our liquidity or capital resources
in the future.





ITEM
      3.
            Quantitative
      and Qualitative Disclosures About Market
Risk.





The
following discussion about our market risk includes “forward-looking statements”
that involve risks and uncertainties.  Actual results could differ
materially from those projected in the forward-looking statements. We do not use
derivative financial instruments for speculative or trading
purposes.  We are exposed to market risk from changes in foreign
currency exchange rates that could affect our future results of operations and
financial condition.  We manage our exposure to these risks through
our regular operating and financing activities.




Foreign
exchange




We have
foreign-based operations in Canada that accounted for 3% of net sales during the
first quarter of 2010 and 4% of net sales during fiscal 2009.  We
advance funds to and from our foreign subsidiary denominated in U.S. dollars,
exposing the foreign subsidiary to the effect of changes in spot exchange rates
of the Canadian dollar relative to the U.S. dollar.  We do not
regularly use forward-exchange contracts to hedge these
exposures.  Based on our foreign currency exchange rate exposure for
intercompany advances of approximately $767,000 to our Canadian operations at
March 31, 2010, a 10% adverse change in the currency rate would reduce earnings
before income taxes by approximately $76,700.





All
transactions with our licensees are denominated in U.S. dollars so the licensee
bears the currency exchange risk.  Accordingly, exchange rate
fluctuations in international markets served by our licensees do not directly
affect our results of operations.  However, exchange rate fluctuations
in these markets may affect the ability of our licensees to conduct their
business operations profitably.




- 17
-




ITEM
      4.
            Controls
      and Procedures.





As
required by Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act
of 1934 (the "Exchange Act"), our management, including our Chief Executive
Officer and Chief Financial Officer, evaluated as of March 31, 2010, the
effectiveness of our disclosure controls and procedures as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures, as of March 31, 2010, were
effective for the purpose of ensuring that information required to be disclosed
by us in this report is recorded, processed, summarized and reported within the
time periods specified by the rules and forms of the Exchange Act and is
accumulated and communicated to management, including the Chief Executive
Officer and Chief Financial Officer as appropriate to allow timely decisions
regarding required disclosures.





There has
been no change in internal control over financial reporting that
occurred during the quarter ended March 31, 2010 that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.


- 18
-


PART
II – OTHER INFORMATION




ITEM
      1.
            Legal
      Proceedings.





None




ITEM
      1A.
            Risk
      Factors.




Our
business is subject to certain risks and events that, if they occur, could
adversely affect our financial condition and results of operations and the
trading price of our common stock. For a discussion of these risks, please refer
to the “Risk Factors” section of the 2009 Form 10-K. In connection with our
preparation of this quarterly report, management has reviewed and considered
these risk factors and has determined that there have been no material changes
to our risk factors since the date of filing of the 2009 Form 10-K.




ITEM
      2.
            Unregistered
      Sales of Equity Securities and Use of
Proceeds.




None




ITEM
      3.
            Defaults
      Upon Senior Securities.




None




ITEM
      4.
            Reserved.





ITEM
      5.
            Other
      Information.




None




ITEM
      6.
            Exhibits.





The
Exhibit Index filed herewith is incorporated herein by
reference.


- 19
-


SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





RBC Life Sciences, Inc.RegistrantMay 13, 2010
                          By:
                          /s/          John W.
      PriceDate
                          Its:
                          President and Chief Executive OfficerMay 13, 2010
                          By:
                          /s/          Steven E.
      BrownDate
                          Its:
                          Vice President-Finance andChief Financial Officer(Principal Financial and Accounting
Officer)


- 20
-





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


- 21
-