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, 2015

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. Employer
incorporation 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 x     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
o
Non-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 May 1, 2015
Common Stock, $0.001 par value per share
 
2,212,350 shares




TABLE OF CONTENTS

 
Page Number
PART I – FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements
 
Condensed Consolidated Balance Sheets
 
Condensed Consolidated Statements Of Comprehensive Income (Loss)
 
Condensed Consolidated Statements Of Cash Flows
 
Notes to Condensed Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 4.
Controls and Procedures
 
 
 
PART II – OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
 
 
 
Signatures
 
 
Exhibit Index
 



PART 1 – FINANCIAL INFORMATION

ITEM 1.             FINANCIAL STATEMENTS

RBC LIFE SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

 
March 31,
2015
 
December 31,
2014
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
921,897

 
$
1,921,349

Accounts receivable, net of allowance for doubtful accounts of $36,000 and $35,000, respectively
1,352,838

 
1,285,843

Inventories
4,729,401

 
4,799,083

Deferred income taxes
378,974

 
376,925

Prepaid expenses and other current assets
601,428

 
464,020

Total current assets
7,984,538

 
8,847,220

Property and equipment, net
4,607,251

 
4,683,496

Goodwill, net
2,183,009

 
2,221,347

Intangible assets, net
30,532

 
39,975

Other assets, net
98,013

 
203,906

 
$
14,903,343

 
$
15,995,944

LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Current liabilities:
 

 
 

Accounts payable, trade
$
1,989,990

 
$
2,310,192

Accrued liabilities
1,472,723

 
1,420,050

Current maturities of long-term obligations
234,014

 
229,538

Deferred revenue
2,252,174

 
2,147,290

Total current liabilities
5,948,901

 
6,107,070

Long-term obligations, less current maturities
846,721

 
906,809

Deferred income taxes
317,817

 
556,440

Commitments and contingencies


 


Shareholders’ equity:
 
 
 

Common stock, $0.001 par value; 50,000,000 shares authorized; 2,212,350 shares issued and outstanding at March 31, 2015 and December 31, 2014
2,212

 
2,212

Additional paid-in capital
13,713,630

 
13,713,630

Accumulated deficit
(5,967,082
)
 
(5,417,092
)
Accumulated other comprehensive income
41,144

 
126,875

 
7,789,904

 
8,425,625

 
$
14,903,343

 
$
15,995,944


See notes to condensed consolidated financial statements.

- 3 -


RBC LIFE SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

 
Three Months Ended March 31,
 
2015
 
2014
Net sales
$
5,359,810

 
$
5,713,120

Cost of sales
2,310,646

 
2,531,035

Gross profit
3,049,164

 
3,182,085

Operating expenses:
 
 
 
General and administrative
2,616,639

 
2,720,606

Distributor commissions
1,114,942

 
834,463

Depreciation and amortization
94,157

 
119,210

Total operating expenses
3,825,738

 
3,674,279

Operating loss
(776,574
)
 
(492,194
)
Interest expense
21,298

 
25,468

Loss before income taxes
(797,872
)
 
(517,662
)
Benefit for income taxes
(247,882
)
 
(139,774
)
Net loss
(549,990
)
 
(377,888
)
 
 
 
 
Other comprehensive loss:
 
 
 
Foreign currency translation adjustment
(85,731
)
 
(14,352
)
Comprehensive loss
$
(635,721
)
 
$
(392,240
)

Net loss per share:
 
 
 
  Basic
$
(0.25
)
 
$
(0.17
)
  Diluted
$
(0.25
)
 
$
(0.17
)

Weighted average common shares outstanding:
 
 
 
  Basic
2,212,350

 
2,212,350

  Diluted
2,212,350

 
2,212,350


See notes to condensed consolidated financial statements.




- 4 -


RBC LIFE SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Three Months Ended March 31,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net loss
$
(549,990
)
 
$
(377,888
)
Adjustment for non-cash items:
 
 
 
Depreciation and amortization
112,861

 
139,451

Stock-based compensation
—

 
848

Deferred income taxes and other
(248,606
)
 
(141,177
)
Change in operating assets and liabilities:
 
 
 
Accounts receivable
(67,072
)
 
(141,869
)
Inventories
62,516

 
(697,306
)
Prepaid expenses and other current assets
(145,091
)
 
(53,450
)
Other assets
104,431

 
(43,382
)
Accounts payable and accrued liabilities
(242,145
)
 
339,795

Deferred revenue
109,778

 
(458,523
)
Net cash used in operating activities
(863,318
)
 
(1,433,501
)
Cash flows from investing activities:
 

 
 

Purchase of property and equipment
(37,649
)
 
(303,665
)
Net cash used in investing activities
(37,649
)
 
(303,665
)
Cash flows from financing activities:
 

 
 

Payments of long-term obligations
(55,613
)
 
(51,590
)
Net cash used in financing activities
(55,613
)
 
(51,590
)
Effect of exchange rate changes on cash flows
(42,872
)
 
(26,213
)
Net decrease in cash and cash equivalents
(999,452
)
 
(1,814,969
)
Cash and cash equivalents, beginning of period
1,921,349

 
3,745,684

Cash and cash equivalents, end of period
$
921,897

 
$
1,930,715


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, including the notes thereto, of RBC Life Sciences, Inc. (sometimes hereinafter referred to collectively as “we”, “our”, "us", “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 condensed 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, 2014 (the “2014 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 condensed consolidated financial statements.

New Accounting Pronouncements:

There were no new accounting pronouncements that are anticipated to have a material impact on the Company's 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 North America and Southeast Asia.  This product line is marketed under the “RBC Life®” brand name.  In most of these markets, 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 may be product consumers only or they may also seek to derive compensation both from the direct sales of products and from sales generated by sponsored Associates. In certain other markets in Southeast Asia and Australia, the Company sells its products through a not-for-resale ("NFR") program. Individuals who participate in the NFR program function similarly to Associates in that they can sponsor others and derive compensation from sales generated by individuals they sponsor. However, they may only order products for personal use and may not resell products to retail customers.

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 addition to its Nutritional Products, RBC markets a line of wound care products (“Medical Products”) under the "MPM MedicalTM" 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, pharmaceutical distributors and our own sales representatives.  Medical Products are used to treat 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, 2015
 
December 31, 2014
Raw materials and bulk products
$
555,469

 
$
370,333

Packaging materials
269,520

 
253,700

Finished goods
3,904,412

 
4,175,050

 
$
4,729,401

 
$
4,799,083


Note D – Prepaid Expenses and Other Current Assets:

Prepaid expenses and other current assets consist of the following:
 
March 31, 2015
 
December 31, 2014
Advance payment to suppliers
$
229,025

 
$
151,365

Prepaid insurance and other
305,177

 
239,385

Certificates of deposit - restricted
67,226

 
73,270

 
$
601,428

 
$
464,020


At March 31, 2015 and December 31, 2014, the Company held certificates of deposit in the amounts of approximately $67,200 and $73,300, respectively, which were pledged to secure surety bonds.

Note E – Property and Equipment:

Property and equipment consists of the following:
 
March 31, 2015
 
December 31, 2014
Building and improvements
$
4,035,311

 
$
4,042,897

Computer software and office equipment
3,569,218

 
3,536,399

Warehouse equipment
254,034

 
254,034

Automotive equipment
14,717

 
14,717

 
7,873,280

 
7,848,047

Less – accumulated depreciation
(4,407,202
)
 
(4,305,724
)
 
3,466,078

 
3,542,323

Land
1,141,173

 
1,141,173

 
$
4,607,251

 
$
4,683,496


Depreciation expense totaled approximately $105,600 and $138,000 for the quarters ended March 31, 2015 and 2014, respectively.

In April 2015, the Company entered into an agreement to sell its headquarters office/warehouse facility located in Irving, Texas for approximately $5.2 million. Pursuant to the terms of this agreement, following the closing of the sale, the Company will lease back the facility from the purchaser through April 2016, while the Company relocates to a new facility. This agreement is cancellable by the prospective purchaser for any reason during an inspection period scheduled to end on May 24, 2015. Accordingly, no assurance can be given that this sale will be completed.










- 7 -


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 Amortization
Balance, December 31, 2014
$
3,285,689

 
$
(1,064,343
)
Currency translation adjustment
(74,809
)
 
36,472

Balance, March 31, 2015
$
3,210,880

 
$
(1,027,871
)
 

 Other intangible assets consist of the following:
 
 
 
March 31, 2015
 
December 31, 2014
 
Average
Life
(years)
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Gross
Carrying
Value
 
Accumulated
Amortization
Copyrights, trademarks and other registrations
19
 
$
99,100

 
$
(72,012
)
 
$
99,100

 
$
(70,690
)
Business license
1
 
35,022

 
(35,022
)
 
37,193

 
(29,240
)
Other
19
 
12,600

 
(9,156
)
 
12,600

 
(8,988
)
 
 
 
$
146,722

 
$
(116,190
)
 
$
148,893

 
$
(108,918
)

Amortization expense related to other intangible assets totaled approximately $7,300 and $4,600 for the quarters ended March 31, 2015 and 2014, respectively. The aggregate estimated amortization expense for intangible assets remaining as of March 31, 2015 is as follows:
Remainder of 2015
$
4,467

2016
5,957

2017
5,957

2018
5,957

2019
5,957

Thereafter
2,237

 
$
30,532


Note G – Accrued Liabilities:

Accrued liabilities consist of the following:
 
March 31, 2015
 
December 31, 2014
Distributor commissions and awards
$
890,126

 
$
867,336

Salaries and wages
502,699

 
468,192

Sales and property taxes
55,211

 
73,954

Interest
6,979

 
7,339

Other
17,708

 
3,229

 
$
1,472,723

 
$
1,420,050










- 8 -


Note H – Long-Term Obligations:

Long-term obligations consist of the following:
 
March 31, 2015
 
December 31, 2014
Mortgage 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 and Chief Executive Officer
$
1,080,735

 
$
1,136,347

Less – current maturities
(234,014
)
 
(229,538
)
 
$
846,721

 
$
906,809


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, 2015, the fair value of fixed-rate long-term debt was approximately $1,165,000, which was $84,000 above the carrying value of approximately $1,081,000.  At December 31, 2014, the fair value of fixed-rate long-term debt was approximately $1,226,000, which was $90,000 above the carrying value of approximately $1,136,000.


Note I – Share-Based Compensation:

The Company records compensation expense for all share-based payments based on the estimated grant date fair value.  There was no share-based compensation expense recognized for the three months ended March 31, 2015. Share-based compensation was $800 for the three months ended March 31, 2014.  There were no material tax benefits related to share-based compensation expense because virtually all share-based compensation resulted from grants of incentive stock options.
 
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model. There were no option grants during the quarters ended March 31, 2015 or 2014.
 
 
A summary of stock option activity for the three months ended March 31, 2015 is as follows:
 
Options
 
Weighted-Average Exercise Price per Share
 
Weighted-Average Remaining Contractual Term (in years)
 
Aggregate Intrinsic Value
Outstanding on December 31, 2014
50,896

 
$
4.35

 
 
 
 
Granted
—

 
—

 
 
 
 
Exercised
—

 
—

 
 
 
 
Forfeited/canceled
(5,080
)
 
3.83

 
 
 
 
Outstanding on March 31, 2015
45,816

 
$
4.41

 
2.7
 
$
—

Exercisable on March 31, 2015
45,816

 
$
4.41

 
2.7
 
$
—

 
There wereno non-vested stock options as of March 31, 2015 or changes to non-vested stock options during the three months then ended.
 
 
 
 
As of March 31, 2015, there was no unrecognized compensation cost related to stock option grants.
 

Note J – Segments and Geographic Area:

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

The Nutritional Products segment manufactures and distributes a line of approximately 100 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 North America and Southeast Asia.  These products are

- 9 -


distributed by a network comprised of independent Associates and NFR program participants in certain markets, primarily North America and Southeast Asia, and by licensees in 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 over 35 wound care products under the "MPM Medical" brand name through a subsidiary operating primarily in the U.S.  These wound care products are distributed to hospitals, nursing homes, home health care agencies, clinics and pharmacies through a network of medical/surgical supply dealers, pharmaceutical distributors and our own sales representatives.  Medical Products are used to treat 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.
 
Segment information is as follows (U.S. dollars in 000s):
 
Nutritional Products
 
Medical Products
 
Consolidated
Three Months Ended March 31, 2015
 

 
 

 
 

Net sales
$
3,849

 
$
1,511

 
$
5,360

Depreciation and amortization
98

 
15

 
113

Operating loss
(771
)
 
(6
)
 
(777
)
Capital expenditures
38

 
—

 
38

Total assets
12,388

 
2,515

 
14,903

Three Months Ended March 31, 2014
 

 
 

 
 

Net sales
$
4,122

 
$
1,591

 
$
5,713

Depreciation and amortization
124

 
15

 
139

Operating income (loss)
(544
)
 
52

 
(492
)
Capital expenditures
304

 
—

 
304

Total assets
13,290

 
3,613

 
16,903


Financial information summarized geographically is as follows (U.S. dollars in 000s):

 
Three Months Ended March 31, 2015
 
Three Months Ended March 31, 2014
 
Net sales
 
Long-Lived assets
 
Net sales
 
Long-Lived assets
Domestic
$
2,057

 
$
6,165

 
$
2,339

 
$
6,114

Russia/Eastern Europe
1,064

 
—

 
2,010

 
—

Canada
210

 
427

 
333

 
491

Southeast Asia
1,967

 
327

 
991

 
239

All others
62

 
—

 
40

 
—

Totals
$
5,360

 
$
6,919

 
$
5,713

 
$
6,844


Significant Customers

The Company recorded sales of Nutritional Products to Coral Club International, Inc. ("CCI"), a licensee of the Company, in the amounts of $1,064,000 and $2,010,000 during the quarters ended March 31, 2015 and 2014, respectively.  The President of CCI is a former member of our Board of Directors and beneficially owns approximately 18% of our common stock. The Company also recorded sales of Medical Products to a medical/surgical dealer (see Note L for additional information related to this dealer) in the amounts of $507,000 and $680,000 during the quarters ended March 31, 2015 and 2014, respectively.  In no other case did a customer of the Company account for more than 10% of net sales during the quarters ended March 31, 2015 and 2014.

Note K – Loss Per Share:

Summarized basic and diluted loss per common share was calculated as follows:

- 10 -


 
Net Loss
 
Weighted
Average
Shares
 
Per Share
Three Months Ended March 31, 2015
 

 
 

 
 

Basic loss per common share
$
(549,990
)
 
2,212,350

 
$
(0.25
)
Effect of dilutive stock options
—

 
—

 
 

Diluted loss per common share
$
(549,990
)
 
2,212,350

 
$
(0.25
)
Three Months Ended March 31, 2014
 

 
 

 
 

Basic loss per common share
$
(377,888
)
 
2,212,350

 
$
(0.17
)
Effect of dilutive stock options
—

 
—

 
 

Diluted loss per common share
$
(377,888
)
 
2,212,350

 
$
(0.17
)

The average number of stock options that were outstanding, but not included in the computation of diluted 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 approximately 46,000 and 69,400 for the quarters ended March 31, 2015 and 2014, respectively.

Note L – Legal Proceedings:

Medical/Surgical Dealer - One medical/surgical dealer accounts for a significant portion of our Medical Products sales. This dealer distributes our Medical Products and provides services primarily to nursing homes and obtains reimbursement for the price of our products from Medicare. This dealer accounted for approximately $507,000 and $680,000, or 9% and 12%, of the Company's net sales during the three months ended March 31, 2015 and 2014, respectively.

On February 27, 2012, we were notified that this dealer filed a voluntary petition for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Central District of California in Santa Ana, California on February 24, 2012. According to its bankruptcy petition, this dealer filed its petition as the most effective means of stabilizing its finances as it resolved a reimbursement guidelines dispute with Medicare, which the dealer believed was improperly withholding payments. The petition stated that this dealer relied on Medicare payments for more than 90% of its revenue and that Medicare had suspended payments to the dealer. In a press release issued by the dealer at the time of the filing, the dealer stated that the Chapter 11 filing would allow it to continue operating without interruption while it resolved its payment dispute with Medicare as expeditiously as possible. In July 2014, pursuant to an arrangement approved by the Bankruptcy Court, this dealer's pre-petition accounts receivable balance was paid in full. We continue to fill this dealer's post-petition orders, with payments received in accordance with our normal terms.

Environmental Research Center - On April 4, 2014, the Company received a notice from Environmental Research Center ("ERC"), a California non-profit corporation, alleging that the Company failed to include a warning notice related to lead content on labels of certain nutritional products sold in California as required under California's Safe Drinking Water and Toxic Enforcement Act of 1986 (commonly known as Proposition 65).

During the first quarter of 2015, the Company and ERC entered into a settlement agreement, which is subject to approval by the Court having jurisdiction over this matter, pursuant to which the Company agreed to modify its labeling of the affected products and pay certain settlement costs. These settlement costs have been recognized in the accompanying condensed consolidated financial statements.

Mannatech - The Company has been notified that Mannatech, Incorporated, a distributor of nutritional supplement products, filed suit against the Company on April 28, 2015 alleging patent infringement with respect to sales of two of the Company's products. The Company is currently assessing this matter and is unable at this time to reasonably estimate the related financial impact.

From time to time, we are a party to claims, litigation or other legal or administrative proceedings that we consider to arise in the ordinary course of our business. No assurances can be given regarding the outcome of these or any other pending proceedings, or the ultimate effect such outcomes may have. However, other than as stated above, we do not believe we are a party to any legal or administrative proceedings which, if determined adversely to us, individually or in the aggregate, would have a material effect on our financial position, results of operations or cash flows.


- 11 -


ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.

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 2014 Form 10-K.

FORWARD-LOOKING STATEMENTS
 
The statements included in this report, other than statements of historical or present facts, 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 generally can be identified by the use of forward-looking terminology such as, but not limited to, “may”, “will”, “expect", “intend”, “estimate”, “anticipate” or “believe.”  These forward-looking statements are based on management's current belief, based on currently available information, as to the outcome and timing of future events.  Although we believe that the expectations and assumptions reflected in the forward-looking statements are reasonable, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond our control. Our forward-looking statements speak only as of the date on which this report was filed with the SEC. We expressly disclaim any obligation to issue any updates or revisions to our forward-looking statements, even if subsequent events cause our expectations to change regarding the matters discussed in those statements. Over time, our actual results, performance, or achievements will likely differ from the anticipated results, performance, or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse to our shareholders.  

We may experience variations in our actual results, performance, or achievements from quarter to quarter and/or year to year as a result of factors that include the following:

•
The level of recruiting and retention of our associates in the North America and Southeast Asia markets and territories served by our licensees;
•
Variations in the level of business activity generated by our key customers;
•
The opening of new markets;
•
The timing and efficacy of company-sponsored events, promotions, and other marketing and sales initiatives;
•
New product introductions;
•
The negative impact of new regulations or changes in existing regulations domestically and/or internationally that may limit or restrict the sale of certain products;
•
The integration and operation of new information technology systems;
•
The inability to introduce new products or the introduction of new products by competitors;
•
Entry into one or more of our markets by competitors;
•
General conditions in the nutritional supplement industry, the network marketing industry, and the wound care industry; and
•
General economic conditions globally and/or in markets where we or our licensees conduct business.

As a result of these and other risks and uncertainties, sales, expenses, and results of operations could vary significantly in the future, and period-to-period comparisons should not be relied upon as indications of future performance. The foregoing list of risks and uncertainties may not contain all of the risks and uncertainties that could affect us. Please consider our forward-looking statements in light of these risks and uncertainties 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: wellness products, fitness products and personal care products.   Products include herbal formulas, vitamins, minerals, antioxidants and personal care products.  In certain markets, principally in North America and Southeast Asia, we distribute Nutritional Products directly through a network comprised of independent Associates and individuals who participate in our NFR program. 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,

- 12 -


pharmaceutical distributors and our own sales representatives.  Medical Products are used to treat and manage pain associated with wounds, in the acute care, long-term care and oncology markets.

Sales by segment in dollars and as a percentage of consolidated net sales are as follows:
 
Three Months Ended March 31,
 
2015
 
2014
 
(U.S. dollars in 000’s)
Nutritional Products:
 

 
 

 
 

 
 

Associate network
$
2,756

 
52
%
 
$
2,084

 
36
%
Licensees
1,094

 
20
%
 
2,038

 
36
%
 
3,850

 
72
%
 
4,122

 
72
%
Medical Products
1,510

 
28
%
 
1,591

 
28
%
 
$
5,360

 
100
%
 
$
5,713

 
100
%

Associate Network.  Sales in this channel are dependent upon the number and productivity of our Associates.  Accordingly, growth in sales is generally dependent upon the sponsorship of new Associates and retention of existing Associates.  Factors that affect the number of new recruits and active Associates include entry into new geographic markets, introduction of new products, and promotional activities.

The following table sets forth our Associate networks' net sales (including NFR sales) by geographic region as a percentage of total net sales for the periods indicated:
 
Three Months Ended March 31,
 
2015
 
2014
U.S.
21
%
 
36
%
Canada
8

 
16

Southeast Asia
71

 
48

 
100
%
 
100
%

Licensees. 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 CCI, which accounted for virtually all of our licensees' net sales in the three months ended March 31, 2015 and 2014. Following the completion of a ten-year exclusive distributorship agreement between the parties, in August 2014, the Company entered into a new two-year exclusive distributorship agreement with CCI. Under the new agreement, CCI’s exclusive territory includes Russia and other countries located primarily in Europe and Central Asia. In consideration of the rights granted to CCI under the agreement, CCI is required to purchase certain minimum amounts of products from the Company each year, which minimum amounts are consistent with the previous agreement. The President of CCI is a former member of our Board of Directors and beneficially owns approximately 18% of our common stock.

CCI orders products from the Company and pays for products when they are segregated in the Company's warehouse for CCI’s account. Once segregated, products are stored until CCI provides shipping instructions; segregated products are not subject to return except in the case of a manufacturing defect.  The Company's sales to CCI may fluctuate from quarter to quarter, based on changes in sales demand through CCI's Associate network, regulatory changes and other logistical considerations. The backlog related to CCI’s account was $4,164,000 and $5,867,000 at March 31, 2015 and 2014, respectively.

Under the previous agreement, CCI was required to pay the Company a monthly royalty calculated as a percentage of its sales of the Company's products. Under the new agreement, in lieu of a royalty, the prices at which products are sold to CCI were marked up to include the royalty so that no additional royalty is due upon the sale of the Company's products by CCI. To affect the transition of royalty calculations under the previous agreement and the new agreement, the Company recognized royalties of $941,000 on a one-time basis in August 2014. Of this amount, approximately $476,000 was recorded as royalty revenue in the third quarter of 2014 while the remainder was recorded as deferred revenue pending shipment of the related products.These royalties are being paid over an 18-month period which began October 2014 in the approximate amount of $52,000 per month.

- 13 -



Medical Products. We sell Medical Products primarily in the U.S. to wholesalers such as medical/surgical dealers and pharmaceutical distributors and directly to various health care providers such as hospitals, nursing homes, clinics and pharmacies through our own sales representatives. In some cases, wholesalers and distributors 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 34% and 43% of the net sales of our Medical Products during the three months ended March 31, 2015 and 2014, respectively. On February 24, 2012, this dealer filed a voluntary petition for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Central District of California in Santa Ana, California. See Note L - Legal Proceedings in the accompanying condensed consolidated financial statements for further information related to these proceedings.


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 three months ended March 31, 2015 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 2014 Form 10-K.

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

Three Months Ended March 31,
 
2015
 
2014
Net sales
100.0
 %
 
100.0
 %
Cost of sales
43.1

 
44.3

Gross profit
56.9

 
55.7

Operating expenses:
 

 
 

General and administrative
48.8

 
47.6

Distributor commissions
20.8

 
14.6

Depreciation and amortization
1.8

 
2.1

Total operating expenses
71.4

 
64.3

Operating loss
(14.5
)
 
(8.6
)
Interest expense
0.4

 
0.4

Loss before income taxes
(14.9
)
 
(9.0
)
Benefit for income taxes
(4.6
)
 
(2.4
)
Net loss
(10.3
)%
 
(6.6
)%

Three months ended March 31, 2015 compared with the three months ended March 31, 2014 (U.S. dollars in 000s except per share amounts)
 
Net sales. Net sales for the three months ended March 31, 2015 were $5,360 compared with net sales for the same period in 2014 of $5,713, a decrease of $353, or 6%. This decrease resulted from a $272 decrease in net sales of Nutritional Products and an $81 decrease in net sales of Medical Products. The decrease in net sales of Nutritional Products resulted from a $944 decrease in net sales to our licensees that was partially offset by a $672 increase in net sales through our Associate network.

Associate Network.  Net sales through the Associate network channel increased by $672 during the three months ended March 31, 2015 compared to the same period in 2014. The increase in sales was attributable to sales growth in our Southeast Asia markets, which reported increased sales during the first three months of 2015 of $976. Sales growth in Asia was attributable to the opening

- 14 -


of offices in Malaysia and Indonesia in February 2014 and June 2014, respectively. Sales growth in Southeast Asia was partially offset by a $304 decline in North American sales.

Licensees.  Net sales to our licensees decreased as a result of decreased shipments to CCI; sales to CCI decreased $946, or 47%, during the first three months of 2015.  Sales to CCI are impacted by a variety of factors including global economic and political factors, regulatory changes and logistical considerations, which can impact the timing of shipments into CCI's markets.

Medical products.  Sales to the largest customer in this segment, which distributes wound care products and provides services to the nursing home market, declined by $173 during the first three months of 2015 compared to the first three months of 2014.  Sales to this dealer in the first three months of 2015 were approximately $507, or 34%, of the net sales of our Medical Products. In February 2012, this customer filed for Chapter 11 bankruptcy protection. See Note L - Legal Proceedings in the accompanying condensed consolidated financial statements for further information related to these proceedings. Sales to other customers increased $92 during the first three months of 2015 primarily due to increased sales of certain collagen-based wound care products.

Cost of sales.  Cost of sales for the three months ended March 31, 2015 was $2,311 compared with $2,531 for the three months ended March 31, 2014, a decrease of $220, or 9%. As a percentage of net sales, cost of sales was approximately 43% in the first three months of 2015 and 44% in the first three months of 2014. The decrease in cost of sales as a percentage of net sales was primarily the result of a shift in the mix of sales toward lower cost Associate network products sales that was partially offset by lower gross margins associated with licensee sales due to a change in product mix.
 
General and administrative. General and administrative expenses for the three months ended March 31, 2015 were $2,617 compared with expenses in the first three months of 2014 of $2,721, a decrease of $104, or 4%. This decrease was attributable to the one-time write off of certain start up costs associated with our entry into Hong Kong in the first quarter of 2014 that did not recur in the first quarter of 2015 and lower sales and marketing expenses in North America. These expense reductions were partially offset by increased expenses associated with our Malaysia and Indonesia offices that opened in February 2014 and June 2014, respectively. As a percentage of net sales, general and administrative expenses were 49% and 48% in the three months ended March 31, 2015 and 2014, respectively.
 
Distributor commissions. Distributor commissions were $1,115 for the three months ended March 31, 2015 compared with $834 in the first three months of 2014, an increase of $281, or 34%.  This increase corresponds to the increase in Associate network sales in the first three months of 2015 compared to Associate network sales in the first three months of 2014. With respect to our Associate network, distributor commissions as a percentage of commissionable sales (exclusive of rebates that are recorded as a reduction of sales) were approximately 40% in the first three months of 2015 and 2014.  On a consolidated basis, distributor commissions as a percentage of net sales were 21% and 15% in the three months ended March 31, 2015 and 2014, respectively.

Income taxes.  We recorded income tax benefits of $248 and $140 during the three months ended March 31, 2015 and 2014, respectively, based on our estimate of the effective annual income tax rate for the applicable period.

Net loss.  As a result of the factors described above, the net loss for the three months ended March 31, 2015 was $550, or $0.25 per share, compared with a net loss in the first three months of 2014 of $378, or $0.17 per share.


LIQUIDITY AND CAPITAL RESOURCES (U.S. dollars in 000s)
 
Cash and working capital. During the first three months of 2015, we had a net decrease in cash of $999 compared with a net decrease in cash of $1,815 in the first three months of 2014.  At March 31, 2015, we had working capital of $2,036, a $704 decrease from working capital at December 31, 2014 of $2,740.  During the quarter, working capital and cash fluctuated significantly due to the timing of cash receipts from customers, payments to vendors, and the reasons described below.
 
Operating activities. In the first three months of 2015, our operating activities used cash flow of $863.  In the first three months of 2014, our operating activities provided cash flow of $1,434.  The net loss adjusted for non-cash activities, including depreciation and amortization, share-based compensation and deferred taxes, used cash flows of $686 and $379 in the first three months of 2015 and 2014, respectively. Cash was also used during the first three months of 2015 to reduce accounts payable and accrued liabilities by $242, which is generally attributable to the normal fluctuation in timing of billings from and payments to suppliers, and to an increase in prepaid expenses by $145, which was primarily attributable to payments in connection with the renewal of insurance contracts and maintenance agreements. These uses of cash were partially offset by cash flow provided by an increase in deferred revenue of $110 in the first three months of 2015, which represented $230 of cash received in March 2015 for Associate network orders that were not shipped until April 2015 that was partially offset by a net decrease in CCI's order deposits and inventory held for later shipment.

- 15 -



Investing activities. During the first three months of 2015, we used $38 for capital expenditures, which was related to the replacement of our Associate Sales and Marketing computer system with a new computer system that was deployed in April 2015. In December 2013, the Company engaged GSAT, Inc. to develop the new Associate Sales and Marketing computer system. The founder and CEO of GSATi is a member of our Board of Directors.

In April 2015, we entered into an agreement to sell our headquarters office/warehouse facility located in Irving, Texas for approximately $5.2 million. Pursuant to the terms of this agreement, following the closing of the sale, we will lease back the facility from the purchaser through April 2016, while we relocate to a new facility. This agreement is cancellable by the prospective purchaser for any reason during an inspection period scheduled to end on May 24, 2015. Accordingly, no assurance can be given that this sale will be completed.
 
Financing activities. During the first three months of 2015, financing activity included the repayment of long-term debt in the amount of $56. During the first three months of 2014, financing activity included the repayment of long-term debt in the amount of $52.

Share repurchase program. On August 28, 2013, the Company announced that the Board of Directors had authorized a plan to repurchase, at management's discretion, up to 111,000 shares of common stock, representing 5% of the Company's outstanding common stock. The Company's repurchase plan was effective as of that date and expired on February 28, 2015. No common stock repurchase transactions were executed as a result of the share repurchase program.

General liquidity and cash flows. Presently, the Company is considering alternative sources of capital, including bank borrowings, real estate financing and other types of debt or equity financings to facilitate our expansion in Asia and provide flexibility in the event of a decrease in demand for our products, including a decrease in demand from our licensees, which could adversely affect our liquidity. We can give no assurance, however, that we will be able to obtain any additional outside financing or obtain financing on terms we would find commercially acceptable.  During the next 12 months, we have no significant capital expenditures planned .
 
Other than those factors described above, we are not aware of any trends or uncertainties that would significantly affect our liquidity or capital resources in the future.

ITEM 4.
Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer (as our principal executive officer and principal financial officer, respectively), evaluated as of March 31, 2015, 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 (as our principal executive officer and principal financial officer, respectively) concluded that our disclosure controls and procedures, as of March 31, 2015, were effective.

Changes in Internal Control over Financial Reporting
There has been no change in internal control over financial reporting (as defined in Rule 13(a)-15 or Rule 15d-15 of the Exchange Act) that occurred during the quarter ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION
 
ITEM 1.
Legal Proceedings.

On February 24, 2012, a medical/surgical dealer that accounted for approximately $507,000 and $680,000 of the Company's sales during the three months ended March 31, 2015 and 2014, respectively, filed a voluntary petition for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Central District of California in Santa Ana, California. See Part I, Item 1, Note L - Legal Proceedings of this report for additional information related to these proceedings, which is incorporated herein by reference.

On April 4, 2014, the Company received a notice from Environmental Research Center, a California non-profit corporation alleging that the Company failed to include a warning notice related to lead content on labels of certain Nutritional Products sold in California

- 16 -


as required under California's Safe Drinking Water and Toxic Enforcement Act of 1986. During the first quarter of 2015, the Company and ERC entered into a settlement agreement, which is subject to approval by the Court having jurisdiction over this matter, pursuant to which the Company agreed to modify its labeling of the affected products and pay certain settlement costs. See Part I, Item 1, Note L - Legal Proceedings of this report for additional information related to this notice, which is incorporated herein by reference.

The Company has been notified that Mannatech, Incorporated, a distributor of nutritional supplement products, filed suit against the Company on April 28, 2015 alleging patent infringement with respect to sales of two of the Company's products. See Part I, Item 1, Note L - Legal Proceedings of this report for additional information related to this notice, which is incorporated herein by reference.


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

Not applicable

ITEM 3.
Defaults Upon Senior Securities.
 
Not applicable

ITEM 4.
Mine Safety Disclosures.

Not applicable
 
ITEM 5.
Other Information.
 
Not applicable

ITEM 6.
Exhibits.

The Exhibit Index filed herewith is incorporated herein by reference.


- 17 -


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.
 
 
Registrant
 
 
 
 
May 14, 2015
 
By:
/s/             Steven E. Brown
Date
 
Its:
Chief Executive Officer
 
 
 
(principal executive officer)
 
 
 
 
May 14, 2015
 
By:
/s/              Daley L. Seeker
Date
 
Its:
Vice President-Finance and Chief Financial Officer
 
 
 
(principal financial and accounting officer)


- 18 -


RBC LIFE SCIENCES, INC.

Exhibit Index

Exhibit Number
Description
31.1
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
 
 
31.2
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
 
 
32.1
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 2002*
 
 
32.2
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*
 
 
101.INS
XBRL Instance Document *v
 
 
101.SCH
XBRL Taxonomy Extension Schema Document *v
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document * v
 
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document * v
 
 
101.LAB
XBRL Taxonomy Extension Label Linkbase Document * v
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document * v

* Filed or furnished electronically herewith.

v Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Exchange Act and otherwise are not subject to liability under those sections. The financial information contained in the XBRL (eXtensible Business Reporting Language)-related documents is unaudited and unreviewed.



- 19 -




EXHIBIT 31.1
 
SECTION 302 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER
 
 
I, Steven E. Brown, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of RBC Life Sciences, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
Date: May 14, 2015
 

 
/s/           Steven E. Brown
 
Steven E. Brown
 
Chief Executive Officer
 








EXHIBIT 31.2
 
SECTION 302 - CERTIFICATION OF CHIEF FINANCIAL OFFICER

 
I, Daley L. Seeker, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of RBC Life Sciences, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
Date: May 14, 2015
 

 
/s/            Daley L. Seeker
 
Daley L. Seeker
 
Vice President-Finance and Chief Financial Officer

 







EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of RBC Life Sciences, Inc. (the “Company”) for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven E. Brown, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


 
/s/             Steven E. Brown
 
Steven E. Brown
 
Chief Executive Officer
 
May 14, 2015

 








EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of RBC Life Sciences, Inc. (the “Company”) for the quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daley L. Seeker, Vice President-Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


 
/s/             Daley L. Seeker
 
Daley L. Seeker
 
Vice President-Finance and Chief Financial Officer
 
May 14, 2015




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