lfvn-20210331

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 MARCH 31, 2021


☐			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 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 April 23, 2021 was 14,004,850.

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:

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

•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;

•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;

•Potential adverse effects on our business and stock price due to ineffective internal controls;

•Disruptions in our information technology systems;

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

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

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

•Inability to raise additional capital or complete desired acquisitions;

•Dependence upon a few products for revenue;

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

•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;

•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;

•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;

•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;

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

•Dilution of outstanding common shares may occur if holders of our existing options exercise their securities or upon future vesting of restricted stock units.

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 (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	29
Item 4.	Controls and Procedures	30

PART II. Other Information		30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
Signatures		33

PART I. Financial Information

Item 1. Financial Statements

LIFEVANTAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31, 2021		June 30, 2020
(In thousands, except per share data)
ASSETS
Current assets
Cash and cash equivalents	$	18,955	$	22,138
Accounts receivable	3,307		2,610
Income tax receivable	764		—
Inventory, net	14,820		13,888

Prepaid expenses and other	5,774		5,232
Total current assets	43,620		43,868

Property and equipment, net	11,428		7,170
Right-of-use assets	13,579		956
Intangible assets, net	752		851
Deferred income tax asset	1,823		2,164
Equity securities	2,205		2,205
Other long-term assets	1,712		1,663
TOTAL ASSETS	$	75,119	$	58,877

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	5,161	$	3,521
Commissions payable	7,929		9,219


Income tax payable	358		784
Lease liabilities	1,639		1,184
Other accrued expenses	7,190		10,311

Total current liabilities	22,277		25,019





Long-term lease liabilities	16,195		—
Other long-term liabilities	1,019		604
Total liabilities	39,491		25,623
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 13,989 and 14,313 issued and outstanding as of March 31, 2021 and June 30, 2020, respectively	1		1
Additional paid-in capital	128,842		126,416
Accumulated deficit	(93,320)		(93,307)
Accumulated other comprehensive income	105		144
Total stockholders’ equity	35,628		33,254
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	75,119	$	58,877

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

(Unaudited)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2021		2020		2021		2020
(In thousands, except per share data)
Revenue, net	$	51,570	$	56,077	$	165,405	$	173,547
Cost of sales	8,818		9,095		28,404		28,515
Gross profit	42,752		46,982		137,001		145,032
Operating expenses:
Commissions and incentives	25,154		26,668		77,939		82,677
Selling, general and administrative	15,510		17,281		48,027		53,098


Total operating expenses	40,664		43,949		125,966		135,775
Operating income	2,088		3,033		11,035		9,257
Other expense:
Interest expense, net	(2)		(30)		(17)		(119)
Other expense, net	(255)		(337)		(263)		(565)

Total other expense	(257)		(367)		(280)		(684)
Income before income taxes	1,831		2,666		10,755		8,573
Income tax expense	(107)		(1,005)		(2,768)		(848)
Net income	$	1,724	$	1,661	$	7,987	$	7,725
Net income per share:
Basic	$	0.12	$	0.12	$	0.56	$	0.55
Diluted	$	0.12	$	0.11	$	0.55	$	0.53
Weighted-average shares outstanding:
Basic	14,071		14,252		14,175		14,054
Diluted	14,212		14,689		14,420		14,592
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	$	(443)	$	—	$	(39)	$	(30)

Other comprehensive (loss) income, net of tax	(443)		—		(39)		(30)
Comprehensive income	$	1,281	$	1,661	$	7,948	$	7,695

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 Income		Total
	Shares	Amount
(In thousands)
Balances, June 30, 2020	14,313	$	1	$	126,416	$	(93,307)	$	144	$	33,254

Stock-based compensation	—	—		520		—		—		520
Exercise of options	2	—		11		—		—		11
Common stock issued under equity award plans	74	—		—		—		—		—
Common stock issued under employee stock purchase plan	23	—		246		—		—		246
Shares canceled or surrendered as payment of tax withholding and other	(38)	—		(506)		—		—		(506)
Repurchase of company stock	(136)	—		—		(2,000)		—		(2,000)
Currency translation adjustment	—	—		—		—		160		160
Net income	—

SEC Form 10-Q filed by Lifevantage Corporation