lfvn-20241231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________________________________

Form 10-Q

________________________________________________________________________________


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

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2024


☐			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, including area code)

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 4, 2025 was 12,551,281.

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 consultants (which we previously referred to as “distributors” in our prior filings) or to attract new customers and independent consultants on an ongoing basis;

•Non-compliance by our independent consultants with applicable legal requirements or our policies and procedures;

•Changes to our independent consultant compensation plans;

•Dependence upon a few products for revenue;

•Dependence on third parties to manufacture our products;

•Sourcing and pricing of high quality materials for our products;

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

•Risk of being subject to a product recall;

•Product liability claims against us;

•Competition in the dietary supplement and personal care markets;

•Unfavorable publicity on our business or products;

•Actions by activist stockholders;

•Loss of or inability to attract key personnel;

•Risk of being held responsible for certain taxes or assessments and other obligations relating to the activity of our independent consultants;

•Risk related to Global Not For Resale program;

•Inability to comply with evolving laws, regulations, standards, policies, and contractual obligations related to data privacy and security, including cybersecurity;

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

•Inability of new products and technological innovations to gain customer or independent consultant 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;

•Disruptions in our information technology ("IT") systems, including as a result of cybersecurity incidents;

•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;

•Strict government regulations on our business;

•Regulations governing the production or marketing of our products;

•Risk of investigatory and enforcement action;

•Risk of our direct selling program being found non-compliant with current or newly adopted laws or regulations in various markets;

•Laws and regulations prohibiting or severely restricting direct selling;

•International regulatory and business risks, including failure to comply with anti-corruption laws;

•Inability to protect our intellectual property rights;

•Third party intellectual property infringement claims;

•Volatility of the market price of our common stock;

•Risk of substantial sales of shares negatively impacting the market price of our common stock;

•Inability of share repurchase program enhancing long-term stockholder value;

•Risk of additional shares issued diluting voting power of current outstanding common stock or causing decline in stock price;

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

•Risks related to being a smaller reporting company;

•Limitations for disputes, mergers, tender offers, or proxy contests under Delaware law;

•Expense and time consuming legal proceedings;

•Ineffectiveness of internal controls over financial reporting;

•Challenges to tax positions or transfer pricing policies or change in laws;

•Economic, political, foreign exchange and other risks associated with international operations, including consumer discretionary spending habits;

•Unfavorable global economic conditions;

•Securities class action litigation; and

•Securities or industry analysts ceasing coverage or publishing inaccurate or unfavorable research.

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	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

PART II. Other Information		26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	27
Signatures		29

PART I. Financial Information

Item 1. Financial Statements

LIFEVANTAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	December 31, 2024		June 30, 2024
(In thousands, except per share data)
ASSETS
Current assets
Cash and cash equivalents	$	21,595	$	16,886
Accounts receivable	2,087		2,949
Income tax receivable	—		313
Inventory, net	17,467		15,055

Prepaid expenses and other	4,641		2,443
Total current assets	45,790		37,646

Property and equipment, net	7,136		7,813
Right-of-use assets	8,915		9,569
Intangible assets, net	257		323
Deferred income tax asset	5,784		4,268

Other long-term assets	645		680
TOTAL ASSETS	$	68,527	$	60,299

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	5,757	$	5,853
Commissions payable	7,944		6,569


Income tax payable	660		202
Lease liabilities	1,886		1,811
Other accrued expenses	11,302		7,874

Total current liabilities	27,549		22,309





Long-term lease liabilities	10,883		11,801
Other long-term liabilities	206		198
Total liabilities	38,638		34,308
Commitments and contingencies - Note 7
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 12,550 and 12,510 issued and outstanding as of December 31, 2024 and June 30, 2024, respectively	1		1
Additional paid-in capital	138,171		136,644
Accumulated deficit	(106,478)		(108,738)
Accumulated other comprehensive loss	(1,805)		(1,916)
Total stockholders’ equity	29,889		25,991
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	68,527	$	60,299

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 December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
(In thousands, except per share data)
Revenue, net	$	67,762	$	51,624	$	114,976	$	102,988
Cost of sales	13,195		11,066		22,686		21,246
Gross profit	54,567		40,558		92,290		81,742
Operating expenses:
Commissions and incentives	32,525		21,754		52,830		44,227
Selling, general and administrative	18,614		20,065		33,462		38,027


Total operating expenses	51,139		41,819		86,292		82,254
Operating income (loss)	3,428		(1,261)		5,998		(512)
Other income (expense):
Interest income, net	130		108		189		276
Other income (expense), net	(469)		41		(520)		(47)

Total other income (expense)	(339)		149		(331)		229
Income (loss) before income taxes	3,089		(1,112)		5,667		(283)
Income tax benefit (expense)	(539)		456		(1,291)		256
Net income (loss)	$	2,550	$	(656)	$	4,376	$	(27)
Net income (loss) per share:
Basic	$	0.21	$	(0.05)	$	0.36	$	—
Diluted	$	0.19	$	(0.05)	$	0.34	$	—
Weighted-average shares outstanding:
Basic	12,211		12,612		12,166		12,574
Diluted	13,177		12,612		12,903		12,574
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	$	(680)	$	463	$	111	$	169

Other comprehensive income (loss), net of tax	(680)		463		111		169
Comprehensive income (loss)	$	1,870	$	(193)	$	4,487	$	142

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 (Loss)		Total
	Shares	Amount
(In thousands, except per share data)
Balances, June 30, 2024	12,510	$	1	$	136,644	$	(108,738)	$	(1,916)	$	25,991

Stock-based compensation	—	—		917		—		—		917

Common stock issued under equity award plans	140	—		—		—		—		—
Shares canceled or surrendered as payment of tax withholding and other	(48)	—		(347)		—		—		(347)
Repurchase of company stock	(140)	—		—		(1,114)		—		(1,114)
Common stock issued under employee stock purchase plan	22	—		133		—		—		133
Cash dividends	—	—		—		(500)		—		(500)
Currency translation adjustment	—	—		—		—		791		791
Net income	—	—		—		1,826		—		1,826
Balances, September 30, 2024	12,484	$	1	$	137,347	$	(108,526)	$	(1,125)	$	27,697

Stock-based compensation	—	—		1,722		—		—		1,722

Common stock issued under equity award plans	133	—		—		—		—		—
Shares canceled or surrendered as payment of tax withholding and other	(67)	—		(898)		—		—		(898)

Cash dividends	—	—		—		(502)		—		(502)
Currency translation adjustment	—	—		—		—		(680)		(680)
Net income	—	—		—		2,550		—		2,550
Balances, December 31, 2024	12,550	$	1	$	138,171	$	(106,478)	$	(1,805)	$	29,889

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 Income (Loss)		Total
	Shares	Amount
(In thousands, except per share data)
Balances, June 30, 2023	12,622	$	1	$	134,314	$	(98,305)	$	(1,361)	$	34,649

Stock-based compensation	—	—		978		—		—		978

Common stock issued under equity award plans	281	—		—		—		—		—
Shares canceled or surrendered as payment of tax withholding and other	(90)	—		(465)		—		—		(465)
Repurchase of company stock	(145)	—		—		(795)		—		(795)
Common stock issued under employee stock purchase plan	39	—		126		—		—		126
Cash dividends	—	—		—		(5,534)		—		(5,534)
Currency translation adjustment	—	—		—		—		(294)		(294)
Net income	—	—		—		629		—		629
Balances, September 30, 2023	12,707	$	1	$	134,953	$	(104,005)	$	(1,655)	$	29,294

Stock-based compensation	—	—		750		—		—		750
Exercise of options	—	—		—		—		—		—
Common stock issued under equity award plans	495	—		—		—		—		—
Shares canceled or surrendered as payment of tax withholding and other	(34)	—		(213)		—		—		(213)
Repurchase of company stock	(288)	—		—		(1,876)		—		(1,876)
Cash dividends	—	—		—		(455)		—		(455)
Currency translation adjustment	—	—		—		—		463		463
Net loss	—	—		—		(656)		—		(656)
Balances, December 31, 2023	12,880	$	1	$	135,490	$	(106,992)	$	(1,192)	$	27,307

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,
	2024		2023
(In thousands)
Cash Flows from Operating Activities:
Net income (loss)	$	4,376	$	(27)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	1,603		1,880

Stock-based compensation	2,639		1,728
Non-cash operating lease expense	709		575
Gain on disposal of assets	(4)		—
Amortization of debt discount	16		—


Deferred income tax	(1,516)		(1,627)
Changes in operating assets and liabilities:
Accounts receivable	872		(703)
Income tax receivable	313		7
Inventory, net	(2,473)		1,183
Prepaid expenses and other	(2,207)		970
Other long-term assets	33		61
Accounts payable	(91)		2,641
Income tax payable	458		825
Other accrued expenses	4,787		(491)
Lease liabilities	(899)		(674)
Other long-term liabilities	—		174
Net Cash Provided by Operating Activities	8,616		6,522
Cash Flows from Investing Activities:


Proceeds from sale of property and equipment	4		—
Purchase of property and equipment	(841)		(1,676)
Net Cash Used in Investing Activities	(837)		(1,676)
Cash Flows from Financing Activities:



Repurchase of company stock	(1,114)		(2,671)
Payment of cash dividends	(1,002)		(5,989)
Shares canceled or surrendered as payment of tax withholding and other	(1,245)		(678)
Proceeds from common stock issued under employee stock purchase plan	133		126

Net Cash Used in Financing Activities	(3,228)		(9,212)
Foreign Currency Effect on Cash	158		92
Increase (decrease) in Cash and Cash Equivalents:	4,709		(4,274)
Cash and Cash Equivalents — beginning of period	16,886		21,605
Cash and Cash Equivalents — end of period	$	21,595	$	17,331



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	1	$	3
Cash paid for income taxes	$	2,063	$	633

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

LIFEVANTAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited financial statements and notes of LifeVantage Corporation (“LifeVantage" or the “Company”) as of and for the year ended June 30, 2024 included in the annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on August 28, 2024.

Note 1 — Organization and Basis of Presentation

LifeVantage is a company focused on nutrigenomics, the study of how nutrition and naturally occurring compounds affect human genes to support good health. The Company is dedicated to helping people achieve their health, wellness and financial goals. The Company provides quality, scientifically-validated products to customers and independent consultants as well as a financially rewarding commission-based direct sales opportunity to its independent consultants. LifeVantage sells its products in the United States, Mexico, Japan, Australia, Hong Kong, Canada, Thailand, the United Kingdom, the Netherlands, Germany, Taiwan, Austria, Spain, Ireland, Belgium, New Zealand, Singapore, and the Philippines.

The Company engages in the identification, research, development, formulation and sale of advanced nutrigenomic activators, dietary supplements, weight management products, skin and hair care products, nootropics, and pre- and pro-biotics. The Company's line of scientifically validated dietary supplements includes its flagship Protandim® family of products, the MindBody GLP-1 System™, LifeVantage® Omega+, ProBio, IC Bright®, the Rise AM & Reset PM System®, D3+, Daily Wellness, PhysIQ Fat Burn and Prebiotic dietary supplements. TrueScience® is the Company's line of skin and hair care products and Liquid Collagen. The Company also markets and sells Petandim®, its companion pet supplement formulated to combat oxidative stress in dogs; and AXIO®, its nootropic energy drink mixes.

The condensed consolidated financial statements included herein have been prepared by the Company’s management, without audit, pursuant to the rules and regulations of the SEC. In the opinion of the Company’s management, these interim financial statements include all adjustments that are considered necessary for a fair presentation of its financial position as of December 31, 2024, and the results of operations for the three and six months ended December 31, 2024 and 2023, and the cash flows for the six months ended December 31, 2024 and 2023. Interim results are not necessarily indicative of results for a full year or for any future period.

The condensed consolidated financial statements and notes included herein are presented as required by Form 10-Q, and do not contain certain information included in the Company’s audited financial statements and notes for the fiscal year ended June 30, 2024, pursuant to the rules and regulations of the SEC. For further information, refer to the financial statements and notes thereto as of and for the year ended June 30, 2024, and included in the annual report on Form 10-K on file with the SEC.

Note 2 — Summary of Significant Accounting Policies

Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation.

Use of Estimates

The Company prepares the condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America ("GAAP"). In preparing these statements, the Company is required to use estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. On an ongoing basis, the Company reviews its estimates, including, but not limited to, those related to inventory valuation and obsolescence, sales returns, income taxes and tax valuation reserves, transfer pricing methodology and positions, impairment of assets, share-based compensation, and loss contingencies.

Foreign Currency Translation

A portion of the Company’s business operations occurs outside the United States. The local currency of each of the Company’s subsidiaries is generally its functional currency. All assets and liabilities are translated into U.S. dollars at exchange rates existing at the balance sheet dates, revenue and expenses are translated at weighted-average exchange rates and stockholders’ equity is recorded at historical exchange rates. The resulting foreign currency translation adjustments are recorded as a separate component of stockholders’ equity in the condensed consolidated balance sheets and as a component of

comprehensive income. Transaction gains and losses are included in other expense, net in the condensed consolidated statements of operations and comprehensive income. For the three months ended December 31, 2024 and 2023, net foreign currency losses of approximately $0.5 million and net foreign currency gains of approximately $37,000, respectively, are recorded in other expense, net. For the six months ended December 31, 2024 and 2023, net foreign currency losses of approximately $0.5 million and $0.1 million, respectively, are recorded in other expense, net.

Cash and Cash Equivalents

The Company considers only its monetary liquid assets with original maturities of three months or less as cash and cash equivalents.

Concentration of Credit Risk

Accounting guidance for financial instruments requires disclosure of significant concentrations of credit risk regardless of the degree of such risk. Financial instruments with significant credit risk include cash and investments. At December 31, 2024, the Company had $18.0 million in cash accounts at one financial institution and $3.6 million in accounts at other financial institutions. At June 30, 2024, the Company had $12.6 million in cash accounts at one financial institution and $4.3 million in accounts at other financial institutions. As of December 31, 2024 and June 30, 2024, and during the periods then ended, the Company’s cash balances exceeded federally insured limits.

Accounts Receivable

The Company’s accounts receivable as of December 31, 2024 and June 30, 2024 consist primarily of credit card receivables. Based on the Company’s verification process for customer credit cards and historical information available, management has determined that an allowance for doubtful accounts on credit card sales related to its customer sales as of December 31, 2024 and June 30, 2024 is not necessary. No bad debt expense was recorded during the three and six months ended December 31, 2024 and 2023.

Inventory

As of December 31, 2024 and June 30, 2024, inventory consisted of (in thousands):


	December 31, 2024				June 30, 2024
Finished goods	$	13,900	79.6	%	$	11,841	78.7	%
Raw materials	3,567		20.4	%	3,214		21.3	%
Total inventory	$	17,467	100.0	%	$	15,055	100.0	%

Inventories are carried at the lower of cost or net realizable value, using the first-in, first-out method, which includes a reduction in inventory values of $1.0 million and $1.3 million at December 31, 2024 and June 30, 2024, respectively, related to obsolete and slow-moving inventory.

Fair Value of Financial Instruments

The Company accounts for assets and liabilities using a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs have created the fair-value hierarchy below. This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value.

•Level 1—Quoted prices for identical instruments in active markets;

•Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

•Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Our financial instruments, consisting primarily of cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value due to their short-term nature.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales, value-added, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.

The Company generates the majority of its revenue through product sales to customers. These products include the Protandim® line of dietary supplements, the MindBody GLP-1 System™, LifeVantage® Omega+, ProBio, IC Bright®, the Rise AM & Reset PM System®, D3+, Daily Wellness, PhysIQ Fat Burn and Prebiotic dietary supplements, TrueScience® skin and hair care products and Liquid Collagen, Petandim®, and AXIO® nootropic energy drink mixes. The Company ships most of its product directly to the consumer and receives substantially all payment for product sales in the form of credit card receipts. Revenue from direct product sales to customers is recognized upon shipment, which is when passage of title and risk of loss occurs. For items sold in packs and bundles, the Company determines the standalone selling price at contract inception for each distinct good and then allocates the transaction price on a relative standalone selling price basis. Any discounts are accounted for as a direct reduction to the transaction price. Shipping and handling revenue is recognized upon shipment when the performance obligation is completed.

Contract liabilities, recorded as deferred revenue, include loyalty program credit deferrals with certain customers which are accounted for as a reduction in the transaction price and are generally recognized as credits which are redeemed for additional products at a later date. The Company also records deferred revenue when cash payments are received or due in advance of performance, including amounts which are refundable. In addition, the Company pre-sells tickets to its events. When cash payments are received in advance of events, the cash received is recorded to deferred revenue until the event is held, at which time the Company has performed its obligations under the contract and the revenue is recognized.

Deferred revenue is included in accrued expenses in the consolidated balance sheets. The balance of deferred revenue related to contract liabilities was $1.4 million and $0.9 million as of December 31, 2024 and June 30, 2024, respectively. The contract liabilities impact to revenue for the three months ended December 31, 2024 and 2023 was a decrease of $0.3 million and an increase of $0.1 million, respectively. The contract liabilities impact to revenue for the six months ended December 31, 2024 and 2023 was a decrease of $0.5 million and $40,000, respectively.

Estimated returns are recorded when a product is shipped. Subject to some exceptions based on local regulations, the Company’s return policy is to provide a full refund for a product returned within 30 days. After 30 days of purchase, only unopened product that is in a resalable and restockable condition may be returned within twelve months of purchase and shall receive a 100% refund, less a 10% handling and restocking fee and any shipping and handling costs. The Company establishes a refund liability reserve, and an asset reserve for its right to recover products, based on historical experience. The returns asset reserve and returns liability reserve are evaluated on a quarterly basis. As of December 31, 2024 and June 30, 2024, the returns liability reserve, net was $0.2 million and $0.1 million, respectively.

Shipping and Handling

Shipping and handling costs associated with inbound freight and freight out to customers and independent consultants are included in cost of sales. Shipping and handling fees charged to customers and independent consultants are included in revenue.

Research and Development Costs

The Company expenses all costs related to research and development activities, as incurred. Research and development expenses for the three months ended December 31, 2024 and 2023 were $0.2 million and $0.1 million, respectively. Research and development expenses for the six months ended December 31, 2024 and 2023 were $0.5 million and $0.3 million, respectively.

Leases

The Company accounts for leases in accordance with Accounting Standards Codification ("ASC") 842. The Company reviews all contracts and determines if the arrangement is or contains a lease, at inception. Operating leases are included in right-of-use (“ROU”) assets, current lease liabilities and long-term lease liabilities on the condensed consolidated balance sheets. The Company does not have any finance leases.

Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any upfront lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s lease terms may include options to extend

or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with a term of 12 months or less are not recorded on the balance sheet. The Company’s lease agreements do not contain any residual value guarantees.

Stock-Based Compensation

The Company recognizes stock-based compensation by measuring the cost of services to be rendered based on the grant date fair value of the equity award. The Company recognizes stock-based compensation, net of any estimated forfeitures, over the period an employee is required to provide service in exchange for the award, generally referred to as the requisite service period. The Company estimates forfeitures based on historical information and other management assumptions.

The Black-Scholes option pricing model is used to estimate the fair value of stock options and options under the Company's 2019 Employee Stock Purchase Plan (as amended, the "2019 ESPP"). The determination of the fair value of options is affected by the Company's stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The Company uses historical data for estimating the expected volatility and expected life of stock options required in the Black-Scholes model. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of the stock options.

The fair value of restricted stock grants, including performance restricted stock units that include non-market based performance conditions, is based on the closing market price of the Company's stock on the date of grant less the Company's expected dividend yield. The Company recognizes compensation costs for awards with performance conditions when it concludes it is probable that the performance conditions will be achieved. The Company reassesses the probability of vesting at each balance sheet date and adjusts compensation costs accordingly.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, updated as needed for changes in corporate tax rates. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the effective date of the change. The Company recognizes tax liabilities or benefits from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized would be the largest liability or benefit that the Company believes has greater than a 50% likelihood of being realized upon settlement.

For the three months ended December 31, 2024 and 2023, the Company recognized income tax expense of $0.5 million and a benefit of $0.5 million, respectively. For the six months ended December 31, 2024 and 2023, the Company recognized income tax expense of $1.3 million and a benefit of $0.3 million, respectively. Tax expenses are reflective of the Company’s current estimated federal, state and foreign effective tax rate. Realization of deferred tax assets is dependent upon future earnings in specific tax jurisdictions, the timing and amount of which are uncertain.

Income Per Share

Basic income per common share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period, less unvested restricted stock awards. Diluted income per common share is computed by dividing net income by the weighted-average common shares and potentially dilutive common share equivalents using the treasury stock method.

For the three months ended December 31, 2024 and 2023, the effects of approximately 0.1 million and 26,000 common shares, respectively, issuable upon exercise of options and non-vested shares of restricted stock are not included in computations as their effect was anti-dilutive. For the six months ended December 31, 2024 and 2023, the effects of approximately 0.1 million and 0.1 million common shares, respectively, issuable upon exercise of options and non-vested shares of restricted stock are not included in computations as their effect was anti-dilutive.

The following is a reconciliation of net income per share and the weighted-average common shares outstanding for purposes of computing basic and diluted net income per share (in thousands, except per share amounts):


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Numerator:
Net income (loss)	$	2,550	$	(656)	$	4,376	$	(27)
Denominator:
Basic weighted-average common shares outstanding	12,211		12,612		12,166		12,574
Effect of dilutive securities:
Stock awards and options	966		—		737		—

Diluted weighted-average common shares outstanding	13,177		12,612		12,903		12,574
Net income (loss) per share, basic	$	0.21	$	(0.05)	$	0.36	$	0.00
Net income (loss) per share, diluted	$	0.19	$	(0.05)	$	0.34	$	0.00

Segment Information and Disaggregated Revenue

The Company operates in a single operating segment by selling products directly to customers and through an international network of independent consultants that operates in an integrated manner from market to market. Commissions and incentives expenses are the Company’s largest expense comprised of the commissions paid to its independent consultants. The Company manages its business primarily by managing its international network of independent consultants. The Company disaggregates revenue in two geographic regions: the Americas region and the Asia/Pacific & Europe region.

The following table presents the Company's revenue disaggregated by these two geographic regions (in thousands):


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Americas	$	57,154	$	39,065	$	94,046	$	77,580
Asia/Pacific & Europe	10,608		12,559		20,930		25,408
Total revenue	$	67,762	$	51,624	$	114,976	$	102,988

Additional information as to the Company’s revenue from operations in the most significant geographical areas is set forth below (in thousands):


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
United States	$	55,381	$	37,219	$	90,649	$	74,115
Japan	$	6,278	$	7,314	$	12,261	$	14,828

The following table presents the Company's long-lived assets for its most significant geographic markets (in thousands):


	December 31, 2024		June 30, 2024
United States	$	19,582	$	19,216
Japan	$	1,879	$	1,925

New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), expanding segment disclosure requirements. The amendments require enhanced disclosure for certain segment items and required disclosure on how management uses reported measures to assess segment performance. The amendments do not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments. ASU 2023-07 is effective for the Company’s annual periods beginning July 1, 2024, and for interim periods beginning July 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). The guidance requires disclosure of disaggregated income taxes paid, prescribes standardized categories for

the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for the Company’s annual periods beginning July 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). The guidance requires disclosure, in the notes to financial statements, of specific information about certain costs and expenses at each interim and annual reporting period. ASU 2024-03 is effective for the Company’s annual periods beginning July 1, 2027, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

Other recently issued accounting pronouncements did not or are not believed by management to have a material impact on the Company's present or future financial statements.

Note 3 — Leases

The Company has operating leases for current corporate offices and certain equipment. These leases have remaining terms of approximately one to seven years. As of December 31, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases was 6.43 years and 3.45%, respectively. As of June 30, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases was 6.90 years and 3.46%, respectively.

For the three months ended December 31, 2024 and 2023, operating lease expense was $0.5 million and $0.5 million, respectively. For the six months ended December 31, 2024 and 2023, operating lease expense was $1.0 million and $1.1 million, respectively.

The components of lease expense for the three and six months ended December 31, 2024 and 2023, were as follows:


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Operating lease expense
Operating lease cost	$	468	$	462	$	938	$	992
Variable lease cost	33		45		74		94
Short-term lease costs	4		12		9		23
Total lease expense	$	505	$	519	$	1,021	$	1,109

Supplemental cash flow information related to operating leases was as follows (in thousands):


	Three Months Ended December 31,				Six Months Ended December 31,
	2024		2023		2024		2023
Operating cash outflows from operating leases	$	564	$	755	$	1,129	$	1,090
Right-of-use assets obtained in exchange for lease obligations	$	—	$	—	$	—	$	1,502

Maturity of lease liabilities at December 31, 2024 are as follows (in thousands):


Year ended June 30,	Amount
2025 (remaining six months ending June 30, 2025)	$	1,142
2026	2,314
2027	2,316
2028	2,045
2029	1,772
Thereafter	4,622
Total	14,211
Less: imputed interest	(1,442)
Present value of lease liabilities	$	12,769

Note 4 — Long-Term Debt

On April 12, 2024, the Company entered into a Loan Agreement (the “Loan Agreement”) with Bank of America, N.A., as Lender (the “Lender”). In connection with the Loan Agreement and on the same date, the Company, Lifeline Nutraceuticals Corporation, as Guarantor (the “Guarantor”), and the Lender also entered into a Continuing and Unconditional Guaranty (the “Continuing and Unconditional Guaranty”) and a Security and Pledge Agreement (the “Security and Pledge Agreement”). The Loan Agreement provides for a revolving line of credit in an aggregate principal amount not to exceed $5.0 million (the “Line of Credit” and collectively with the Loan Agreement, Continuing and Unconditional Guaranty and the Security and Pledge Agreement the “2024 Credit Facility”).

In the event the Company borrows under the Line of Credit, interest will be payable commencing on the last day of each month following such borrowing until payment in full of all principal outstanding under the Line of Credit, with all unpaid principal and interest due on April 12, 2027 (the “Expiration Date”). The Line of Credit will bear interest at a rate per year equal to the sum of (i) the greater of the Term Secured Overnight Financing Rate Daily Floating Rate (as defined in the Loan Agreement) or 0.00%, plus (ii) 2.00%. Amounts under the Line of Credit may be repaid and re-borrowed from time to time until the Expiration Date. As of December 31, 2024, the effective interest rate is 6.49%.

The Company’s obligations under the Loan Agreement are secured by a security interest in substantially all of the assets of the Company and the Guarantor, and by a pledge of the membership interests of the Company's subsidiaries, as further provided for in the Security and Pledge Agreement. Pursuant to the Continuing and Unconditional Guaranty, the Guarantor guarantees and promises to pay promptly to the Lender all indebtedness of the Company when due.

The Loan Agreement contains customary covenants, both affirmative and negative, that, among other things, restrict the Company’s ability to deal with the Company's assets outside of the ordinary course, incur additional indebtedness, grant liens on the Company's assets, make certain investments, purchase or otherwise acquire all or substantially all the assets or equity interests of other companies, and enter into consolidations, mergers or other combinations. The Loan Agreement requires that the Company maintain specified financial ratios and satisfy certain financial condition tests.

The Loan Agreement contains certain customary events of default, including, among other things, failure of the Company to make required payments under the Loan Agreement, certain breaches of representations made by the Company or the Guarantor, insolvency or bankruptcy of the Company or the Guarantor, failure to have an enforceable first lien or security interest in any property given as security for the Loan Agreement, or failure of the Company to comply with covenants set forth in the Loan Agreement. If an event of default occurs under the Loan Agreement, the obligation of the Lender to make any additional credit available to the Company may be terminated and the amounts outstanding may become immediately due and payable in the discretion of the Lender, provided that in the event of insolvency or bankruptcy of the Company or the Guarantor, all debts outstanding under the Loan Agreement will automatically become due and payable. Upon the occurrence of any default or after maturity, all amounts outstanding under the Loan Agreement will, at the option of the Lender, bear interest at a rate which is 2.00% higher than the rate of interest otherwise provided under the Loan Agreement.

As of December 31, 2024, the Company was in compliance with its financial covenants under the 2024 Credit Facility. As of December 31, 2024, there was no balance outstanding on the 2024 Credit Facility.

Note 5 — Stockholders’ Equity

During the three months ended December 31, 2024 and 2023, the Company issued 0.1 million and 0.5 million shares of common stock, respectively, under Company stock plans. During the three months ended December 31, 2024 and 2023, the Company issued zero shares of common stock upon the exercise of stock options. During the three months ended December 31, 2024 and 2023, 0.1 million and 34,000 shares of restricted stock, respectively, were canceled or surrendered as payment of tax withholding upon vesting of equity awards.

During the six months ended December 31, 2024 and 2023, the Company issued 0.3 million and 0.8 million shares of common stock, respectively, under Company stock plans. During the six months ended December 31, 2024 and 2023, the Company issued zero shares of common stock upon the exercise of stock options. During the