lfvn-20221231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________________________________

Form 10-Q

________________________________________________________________________________


☒			QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2022


☐			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 001-35647

________________________________________________________________________________

LIFEVANTAGE CORPORATION

(Exact name of Registrant as specified in its charter)

________________________________________________________________________________


Delaware						90-0224471
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

3300 Triumph Blvd, Suite 700, Lehi, UT 84043

(Address of principal executive offices, including zip code)

(801) 432-9000

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, par value $0.0001

LFVN

The Nasdaq Stock Market LLC

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

________________________________________________________________________________

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 ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

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


Large accelerated filer	¨	Accelerated filer	☒
Non-accelerated filer	¨	Smaller reporting company	☒
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

The number of shares outstanding of the issuer’s common stock, par value $0.0001 per share, as of February 1, 2023 was 12,717,325.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q, in particular “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the information incorporated by reference herein contains “forward-looking statements” (as such term is defined in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended). These statements, which involve risks and uncertainties, reflect our current expectations, intentions, or strategies regarding our possible future results of operations, performance, and achievements. Forward-looking statements include, without limitation: statements regarding future products or product development; statements regarding future selling, general and administrative costs and research and development spending; statements regarding the future performance of our network marketing efforts; statements regarding our expectations regarding ongoing litigation; statements regarding international growth; and statements regarding future financial performance, results of operations, capital expenditures and sufficiency of capital resources to fund our operating requirements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and applicable rules of the Securities and Exchange Commission and common law.

These forward-looking statements may be identified in this report and the information incorporated by reference by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “plan,” “predict,” “project,” “should” and similar terms and expressions, including references to assumptions and strategies. These statements reflect our current beliefs and are based on information currently available to us. Accordingly, these statements are subject to certain risks, uncertainties, and contingencies, which could cause our actual results, performance, or achievements to differ materially from those expressed in, or implied by, such statements.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

•Inability to properly manage, motivate and retain our independent distributors or to attract new customers and independent distributors on an ongoing basis;

•The COVID-19 pandemic or the widespread outbreak of any other illness or communicable disease or any other public health crisis, could adversely affect our business, results of operations and financial condition;

•Inability to protect against cyber security risks and to maintain the integrity of data;

•Inability to manage existing markets, open new international markets or expand our operations;

•Non-compliance by our independent distributors with applicable legal requirements or our policies and procedures, including making improper and/or illegal claims about our products or earnings opportunity;

•Inability of new products and technological innovations to gain customer or independent distributor or market acceptance;

•Our business and stock price may be adversely affected if our internal controls over financial reporting is not effective;

•Inability to execute our product launch process due to increased pressure on our supply chain, information systems and management;

•Inability to appropriately manage our inventory;

•Disruptions in our information technology systems;

•International trade or foreign exchange restrictions, increased tariffs, foreign currency exchange fluctuations;

•Inability to raise additional capital or complete desired acquisitions;

•Inability to comply with financial covenants imposed by our credit facility and the impact of debt service obligations and restrictive debt covenants;

•Dependence upon a few products for revenue;

•We may be unable to retain our existing distributor force or customer base or attract additional customers and/or independent distributors;

•High quality materials for our products may become difficult to obtain or expensive;

•Improper actions by our independent distributors that violate laws or regulations could harm our business;

•Dependence on third parties to manufacture our products;

•Disruptions to the transportation channels used to distribute our products;

•We may be subject to a product recall;

•Unfavorable publicity on our business or products;

•We are subject to risks related to Global Not For Resale programs;

•Our direct selling program could be found to not be in compliance with current or newly adopted laws or regulations in various markets;

•Legal proceedings may be expensive and time consuming;

•Strict government regulations on our business;

•Our Cannabidiol (“CBD”) products are subject to varying and changing federal, state or local laws which could adversely affect our results of operations and financial condition;

•Regulations governing the production or marketing of our products;

•Risk of investigatory and enforcement action;

•Government authorities may question our tax positions or transfer pricing policies or change their laws in a manner that could increase our effective tax rate or otherwise harm our business;

•Failure to comply with anti-corruption laws;

•Loss of, or inability to attract, key personnel;

•We may be held responsible for certain taxes or assessments and other obligations relating to the activity of our independent distributors;

•Competition in the dietary supplement and personal care markets;

•Our inability to protect our intellectual property rights;

•Third party claims that we infringe on their intellectual property;

•Product liability claims against us;

•Consumer discretionary spending habits factor into our economic success;

•Economic, political, foreign exchange and other risks associated with international operations;

•Potential delisting of our common stock due to non-compliance with Nasdaq's continued listing requirements;

•Volatility of the market price of our common stock; and

•Substantial sales of shares may negatively impact the market price of our common stock.

When considering these forward-looking statements, you should keep in mind the cautionary statements in this report and the documents incorporated by reference. Except as required by law, we have no obligation and do not undertake to update or revise any such forward-looking statements to reflect events or circumstances after the date of this report.

LIFEVANTAGE CORPORATION

INDEX



		PAGE
PART I. Financial Information		5
Item 1.	Financial Statements:	5
	Condensed Consolidated Balance Sheets (unaudited)	5
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)	6
	Condensed Consolidated Statement of Stockholders’ Equity (unaudited)	7
	Condensed Consolidated Statements of Cash Flows (unaudited)	9
	Notes to Condensed Consolidated Financial Statements (unaudited)	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II. Other Information		28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
Signatures		30

PART I. Financial Information

Item 1. Financial Statements

LIFEVANTAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	December 31, 2022		June 30, 2022
(In thousands, except per share data)
ASSETS
Current assets
Cash and cash equivalents	$	17,370	$	20,190
Accounts receivable	2,407		3,338
Income tax receivable	891		1,752
Inventory, net	20,435		16,472

Prepaid expenses and other	3,254		5,205
Total current assets	44,357		46,957

Property and equipment, net	9,315		9,500
Right-of-use assets	9,744		11,040
Intangible assets, net	521		587
Deferred income tax asset	2,519		1,289

Other long-term assets	1,376		1,333
TOTAL ASSETS	$	67,832	$	70,706

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	8,228	$	7,462
Commissions payable	6,691		7,285


Income tax payable	—		453
Lease liabilities	2,010		2,601
Other accrued expenses	6,405		7,927

Total current liabilities	23,334		25,728





Long-term lease liabilities	12,282		13,154
Other long-term liabilities	321		308
Total liabilities	35,937		39,190
Commitments and contingencies - Note 8
Stockholders’ equity
Preferred stock — par value $0.0001 per share, 5,000 shares authorized, no shares issued or outstanding	—		—
Common stock — par value $0.0001 per share, 40,000 shares authorized and 12,707 and 12,493 issued and outstanding as of December 31, 2022 and June 30, 2022, respectively	1		1
Additional paid-in capital	132,530		131,075
Accumulated deficit	(99,643)		(98,437)
Accumulated other comprehensive loss	(993)		(1,123)
Total stockholders’ equity	31,895		31,516
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	67,832	$	70,706

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIFEVANTAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended December 31,				Six Months Ended December 31,
	2022		2021		2022		2021
(In thousands, except per share data)
Revenue, net	$	53,662	$	52,189	$	105,436	$	105,414
Cost of sales	11,758		9,677		21,700		19,108
Gross profit	41,904		42,512		83,736		86,306
Operating expenses:
Commissions and incentives	23,556		25,449		47,369		49,555
Selling, general and administrative	19,580		17,421		36,310		32,497


Total operating expenses	43,136		42,870		83,679		82,052
Operating (loss) income	(1,232)		(358)		57		4,254
Other income (expense):
Interest income (expense), net	32		(1)		32		(4)
Other income (expense), net	125		(139)		(312)		(316)

Total other income (expense)	157		(140)		(280)		(320)
(Loss) income before income taxes	(1,075)		(498)		(223)		3,934
Income tax benefit (expense)	17		577		(225)		(539)
Net (loss) income	$	(1,058)	$	79	$	(448)	$	3,395
Net (loss) income per share:
Basic	$	(0.08)	$	0.01	$	(0.04)	$	0.26
Diluted	$	(0.08)	$	0.01	$	(0.04)	$	0.25
Weighted-average shares outstanding:
Basic	12,543		13,195		12,500		13,294
Diluted	12,543		13,285		12,500		13,359
Other comprehensive gain (loss), net of tax:
Foreign currency translation adjustment	$	640	$	(179)	$	130	$	(314)

Other comprehensive gain (loss), net of tax	640		(179)		130		(314)
Comprehensive (loss) income	$	(418)	$	(100)	$	(318)	$	3,081

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIFEVANTAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
(In thousands)
Balances, June 30, 2022	12,493	$	1	$	131,075	$	(98,437)	$	(1,123)	$	31,516

Stock-based compensation	—	—		602		—		—		602

Common stock issued under equity award plans	48	—		—		—		—		—
Shares canceled or surrendered as payment of tax withholding and other	(17)	—		(72)		—		—		(72)

Common stock issued under employee stock purchase plan	36	—		121		—		—		121
Cash dividends	—	—		—		(377)		—		(377)
Currency translation adjustment	—	—		—		—		(510)		(510)
Net income	—	—		—		610		—		610
Balances, September 30, 2022	12,560	$	1	$	131,726	$	(98,204)	$	(1,633)	$	31,890

Stock-based compensation	—	—		823		—		—		823

Common stock issued under equity award plans	152	—		—		—		—		—
Shares canceled or surrendered as payment of tax withholding and other	(5)	—		(19)		—		—		(19)

Cash dividends	—	—		—		(381)		—		(381)
Currency translation adjustment	—	—		—		—		640		640
Net loss	—	—		—		(1,058)		—		(1,058)
Balances, December 31, 2022	12,707	$	1	$	132,530	$	(99,643)	$	(993)	$	31,895

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIFEVANTAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (CONTINUED)

(Unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total
	Shares	Amount
(In thousands)
Balances, June 30, 2021	13,609	$	1	$	129,048	$	(92,346)	$	104	$	36,807

Stock-based compensation	—	—		645		—		—		645
Exercise of options	30	—		133		—		—		133
Common stock issued under equity award plans	49	—		—		—		—		—
Shares canceled or surrendered as payment of tax withholding and other	(19)	—		(139)		—		—		(139)
Repurchase of company stock	(460)	—		—		(3,492)		—		(3,492)
Common stock issued under employee stock purchase plan	27	—		175		—		—		175
Currency translation adjustment	—	—		—		—		(135)		(135)
Net income	—	—		—		3,316		—		3,316
Balances, September 30, 2021	13,236	$	1	$	129,862	$	(92,522)	$	(31)	$	37,310

Stock-based compensation	—	—		755		—		—		755

Common stock issued under equity award plans	67	—		—		—		—		—
Shares canceled or surrendered as payment of tax withholding and other	(5)	—		(31)		—		—		(31)
Repurchase of company stock	(454)	—		—		(3,154)		—		(3,154)

Currency translation adjustment	—	—		—		—		(179)		(179)
Net income	—	—		—		79		—		79
Balances, December 31, 2021	12,844	$	1	$	130,586	$	(95,597)	$	(210)	$	34,780

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIFEVANTAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended December 31,
	2022		2021
(In thousands)
Cash Flows from Operating Activities:
Net (loss) income	$	(

SEC Form 10-Q filed by Lifevantage Corporation