ý
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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¨
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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Colorado
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90-0224471
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
|
|
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9785 S. Monroe, Ste 300
|
|
Sandy, UT 84070
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(Address of principal executive offices, including zip code)
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Registrant’s telephone number: (801) 432-9000
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Large accelerated filer
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¨
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Accelerated filer
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ý
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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•
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Inability to strengthen our business and properly manage distractions among our distributors in Japan;
|
•
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We may be unable to manage our growth and expansion;
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•
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We may not succeed in growing existing markets or opening new international markets;
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•
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We may not succeed in expanding our operations;
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•
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Inability of new products to gain distributor or market acceptance;
|
•
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Our inability to execute our product launch process due to increased pressure on our supply chain, information systems and management;
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•
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Disruptions in our information technology systems;
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•
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Inability to protect against cyber security risks and to maintain the integrity of data;
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•
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The impact of our debt service obligations and restrictive debt covenants;
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•
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Claims against us as a result of our independent distributors failing to comply with our policies and procedures;
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•
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International trade or foreign exchange restrictions, increased tariffs, foreign currency exchange;
|
•
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Deterioration of global economic conditions;
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•
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Inability to maintain appropriate level of internal control over financial reporting;
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•
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We may be unable to raise additional capital if needed;
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•
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Exposure to environmental liabilities stemming from past operations and property ownership;
|
•
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Significant dependence upon a single product;
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•
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Our inability to retain independent distributors or to attract new independent distributors on an ongoing basis;
|
•
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High quality material for our products may become difficult to obtain or expensive;
|
•
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Improper actions by our independent distributors that violate laws or regulations;
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•
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Our dependence on third parties to manufacture our products;
|
•
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Disruptions to the transportation channels used to distribute our products;
|
•
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We may be subject to a product recall;
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•
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Government regulations on direct selling activities may prohibit or severely restrict business model;
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•
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Unfavorable publicity on our business or products;
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•
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Our direct selling program could be found to not be in compliance with current or newly adopted laws or regulations;
|
•
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Legal proceedings may be expensive and time consuming;
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•
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Our business is subject to strict government regulations;
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•
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Regulations governing the production or marketing of our products;
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•
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We are subject to the risk of investigatory and enforcement action by the federal trade commission;
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•
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Government authorities may question our tax positions or transfer pricing policies or change their laws in a manner that could increase our effective tax rate or otherwise harm our business;
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•
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Failure to comply with anti-corruption laws;
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•
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Loss of or inability to attract key personnel;
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•
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We could be held responsible for certain taxes or assessments relating to the activity of our independent distributors;
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•
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Competition in the dietary supplement market;
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•
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Our inability to protect our intellectual property rights;
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•
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Third party claims that we infringe on their intellectual property;
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•
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Product liability claims against us;
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•
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Economic, political, foreign exchange and other risks associated with international operations;
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•
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Volatility of the market price of our common stock;
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•
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Substantial sales of shares may negatively impact the market price of our common stock;
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•
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Significant dilution of outstanding voting shares if holders of our existing warrants and options exercise their securities for shares of common stock; and
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•
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We have not paid dividends on our capital stock, and we do not currently anticipate paying dividends in the foreseeable future.
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Page
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•
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Our Compensation: We believe our compensation plan is one of the more financially rewarding in the direct selling industry. Our percentage of sales paid to independent distributors as compensation and incentive is one of the highest percentages reported in the direct selling industry. Our compensation plan also enables independent distributors to earn compensation early and often as they sell our products. Some elements of our compensation plan are paid weekly, allowing new independent distributors to receive compensation quickly. We believe more frequent payments of compensation helps us retain new independent distributors by allowing them to experience success soon after enrolling. We also offer a variety of incentive programs to our independent distributors for achieving specified sales goals. For example, our My LifeVentures
®
is an incentive program that enables independent distributors to earn the title to a new Jeep Wrangler by achieving and maintaining specified sales goals. We also offer various training resources to help our independent distributors become more effective. We believe our compensation plan, incentive programs and training resources help to motivate and prepare our independent distributors for success.
|
•
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Our Products: We offer quality, scientifically-validated products focused on helping individuals look, feel and perform better. Protandim
®
is a patented dietary supplement clinically proven to combat oxidative stress, a natural consequence of cellular metabolism associated with many of the undesirable effects of aging. Our new skin care line, LifeVantage TrueScience
®
, is a combination of scientifically based anti-aging skin care products formulated to target the visible signs of aging on the skin. Our companion pet supplement, Canine Health
®
, incorporates some of the same active ingredients as Protandim
®
to combat oxidative stress in dogs. We believe our significant number of preferred customers who regularly purchase our products without the intention of becoming independent distributors is a strong, independent indicator of the benefits of our products.
|
•
|
Our Culture: We are committed to creating a culture for our independent distributors and employees that focuses on ethical, legal and transparent business practices. At enrollment, our independent distributors agree to abide by our policies and procedures. Our policies and procedures, when followed, ensure that our independent distributors comply with applicable laws and regulations. Our compliance department monitors the activities of our independent distributors as part of our effort to enforce our policies and procedures. Similarly, our code of business conduct and ethics sets forth guidelines and expectations for our employees. We believe our ethical, legal and transparent culture attracts highly qualified employees and independent distributors who share our commitment to these principles.
|
•
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TrueScience
®
Ultra Gentle Facial Cleanser:
a concentrated, ultra-rich cleanser used to remove impurities and light make-up without drying or stripping the natural oils in the skin.
|
•
|
TrueScience
®
Perfecting Lotion:
a hybrid lotion formulated for smoother, radiant and brighter looking skin.
|
•
|
TrueScience
®
Eye Corrector Serum:
a serum that noticeably improves the visible signs of fine lines, creases and wrinkles around the entire eye area, diminishes puffiness above and below the eye, and evens skin tone and dark circles that are visible signs of premature aging.
|
•
|
TrueScience
®
Anti-Aging Cream:
a cream that deeply moisturizes and helps to combat the appearance of fine lines and wrinkles.
|
•
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Blueprint for Prosperity
: professionally-designed training materials independent distributors can utilize in their sales efforts;
|
•
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Pro Audio Series
: our weekly audio series presented by our independent distributor leaders providing training and tips on becoming more productive independent distributors;
|
•
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Premier Schools
: monthly, company-sponsored events held throughout the U.S., and less frequently in Japan, designed to deliver training and motivation to independent distributors;
|
•
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Elite Academy and Global Convention
: quarterly and annual, company-sponsored events intended to provide training and motivation to our independent distributors; and
|
•
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Promotions and Incentive Trips
: we hold special promotions and incentive trips from time to time in order to motivate our independent distributors to accomplish specific sales goals.
|
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For the years ended June 30,
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|||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
Americas
|
$
|
141,227
|
|
|
66.0
|
%
|
|
$
|
133,046
|
|
|
63.9
|
%
|
|
$
|
90,122
|
|
|
71.4
|
%
|
Asia/Pacific
|
72,741
|
|
|
34.0
|
%
|
|
75,132
|
|
|
36.1
|
%
|
|
36,061
|
|
|
28.6
|
%
|
|||
Total
|
$
|
213,968
|
|
|
100
|
%
|
|
$
|
208,178
|
|
|
100
|
%
|
|
$
|
126,183
|
|
|
100
|
%
|
•
|
impose order cancellation, product return, inventory buy-backs and cooling-off rights for consumers and distributors;
|
•
|
require us or our distributors to register with governmental agencies;
|
•
|
impose caps on the amount of commission we can pay;
|
•
|
impose reporting requirements; and
|
•
|
require that we ensure, among other things, that our distributors maintain levels of product sales to qualify to receive commissions and that our distributors are being compensated primarily for sales of products and not primarily for recruiting additional participants.
|
•
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gives the FDA explicit authority to inspect and copy certain records related to any food and to compel a recall if the FDA believes there is a reasonable probability of serious adverse health consequences or death;
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•
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places strict obligations on food and dietary supplement importers to verify that food from foreign suppliers is not adulterated or misbranded; and
|
•
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provides whistle blower protection for employees of conventional food or dietary supplement companies who provide information to governmental authorities about violations of the FFDCA.
|
•
|
inappropriate activities by our independent distributors and any resulting regulatory actions against us or our independent distributors;
|
•
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continued or increased levels of regulatory or media scrutiny of our industry and any regulatory actions, or any adoption of more restrictive regulations, in response to such scrutiny;
|
•
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significant weakening of the Japanese yen;
|
•
|
increased regulatory constraints with respect to the claims we can make regarding the efficacy of our products, which could limit our ability to effectively market our products;
|
•
|
improper practices of other direct selling companies or their independent distributors that increase regulatory or media scrutiny of our industry; and
|
•
|
weakness in the economy or consumer confidence.
|
•
|
any adverse publicity regarding us, our products, our distribution channel, or our competitors;
|
•
|
lack of interest in existing or new products or their failure to achieve desired results;
|
•
|
lack of a compelling business opportunity sufficient to generate the interest and commitment of new independent distributors;
|
•
|
any changes we might make to our independent distributor compensation plan;
|
•
|
any negative public perception of our company or our products or their ingredients;
|
•
|
any negative public perception of our independent distributors and direct selling businesses in general;
|
•
|
our actions to enforce our policies and procedures;
|
•
|
any efforts to sell our products through competitive channels;
|
•
|
any regulatory actions or charges against us or others in our industry; and
|
•
|
general economic and business conditions.
|
•
|
political and economic instability of foreign markets;
|
•
|
foreign governments’ restrictive trade policies;
|
•
|
lack of well-established or reliable legal systems in certain areas in which we operate;
|
•
|
inconsistent product regulation or sudden policy changes by foreign agencies or governments;
|
•
|
the imposition of, or increase in, duties, taxes, government royalties, or non-tariff trade barriers;
|
•
|
difficulty in collecting international accounts receivable and potentially longer payment cycles;
|
•
|
the possibility that a foreign government may limit our ability to repatriate cash;
|
•
|
increased costs in maintaining international marketing efforts;
|
•
|
problems entering international markets with different cultural bases and consumer preferences; and
|
•
|
fluctuations in foreign currency exchange rates.
|
|
Fiscal year
|
||||||||||||||
|
2014
|
|
2013
|
||||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
$
|
2.68
|
|
|
$
|
2.13
|
|
|
$
|
3.85
|
|
|
$
|
2.46
|
|
Second Quarter
|
$
|
2.62
|
|
|
$
|
1.37
|
|
|
$
|
3.42
|
|
|
$
|
1.60
|
|
Third Quarter
|
$
|
1.67
|
|
|
$
|
1.10
|
|
|
$
|
3.07
|
|
|
$
|
2.15
|
|
Fourth Quarter
|
$
|
1.51
|
|
|
$
|
1.22
|
|
|
$
|
2.50
|
|
|
$
|
2.04
|
|
Measured Period
|
LFVN
|
NASDAQ
Composite
|
Peer Group
|
||||||
June 30, 2009
|
$
|
100.00
|
|
$
|
100.00
|
|
$
|
100.00
|
|
June 30, 2010
|
$
|
76.12
|
|
$
|
115.98
|
|
$
|
119.87
|
|
June 30, 2011
|
$
|
223.88
|
|
$
|
153.93
|
|
$
|
170.41
|
|
June 30, 2012
|
$
|
422.39
|
|
$
|
164.70
|
|
$
|
133.24
|
|
June 30, 2013
|
$
|
346.27
|
|
$
|
193.69
|
|
$
|
167.04
|
|
June 30, 2014
|
$
|
214.93
|
|
$
|
254.06
|
|
$
|
172.87
|
|
Period
|
(a) Total
Number of
Shares
(or Units)
Purchased (in thousands)
|
|
(b) Average Price
Paid per Share (or
Unit) (1)
|
|
(c) Total Number
of Shares
(or Units) Purchased
as Part of Publicly
Announced Plans or
Programs (2)
|
|
(d) Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that May Yet Be
Purchased Under the
Plans or Programs (in thousands)
|
||||||
April 1, 2014 to April 30, 2014
|
372
|
|
|
$
|
1.35
|
|
|
372
|
|
|
$
|
2,498
|
|
May 1, 2014 to May 31, 2014
|
1,471
|
|
|
$
|
1.41
|
|
|
1,471
|
|
|
$
|
424
|
|
June 1, 2014 to June 30, 2014
|
307
|
|
|
$
|
1.40
|
|
|
307
|
|
|
$
|
—
|
|
Total
|
2,150
|
|
|
$
|
1.38
|
|
|
2,150
|
|
|
|
(1)
|
Average price paid per share of common stock repurchased is the execution price, including commissions paid to brokers.
|
(2)
|
On March 11, 2014, we announced a share repurchase program authorizing us to repurchase up to $3 million in shares of our common stock. As part of that repurchase program, we entered into a pre-arranged stock repurchase plan that operated in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange. As of June 30, 2014 we had purchased the full $3 million in shares under this repurchase program.
|
|
Years Ended June 30,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue, net
|
$
|
213,968
|
|
|
$
|
208,178
|
|
|
$
|
126,183
|
|
|
$
|
38,919
|
|
|
$
|
11,478
|
|
Cost of sales
|
33,194
|
|
|
31,845
|
|
|
18,052
|
|
|
5,917
|
|
|
1,906
|
|
|||||
Product recall costs
|
—
|
|
|
4,798
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gross profit
|
180,774
|
|
|
171,535
|
|
|
108,131
|
|
|
33,002
|
|
|
9,572
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commission and incentives
|
104,525
|
|
|
101,737
|
|
|
57,955
|
|
|
17,132
|
|
|
4,635
|
|
|||||
Selling, general and administrative
|
56,801
|
|
|
57,730
|
|
|
28,719
|
|
|
12,168
|
|
|
12,259
|
|
|||||
Total operating expenses
|
161,326
|
|
|
159,467
|
|
|
86,674
|
|
|
29,300
|
|
|
16,894
|
|
|||||
Operating income (loss)
|
19,448
|
|
|
12,068
|
|
|
21,457
|
|
|
3,702
|
|
|
(7,322
|
)
|
|||||
Other expense, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(3,177
|
)
|
|
(3
|
)
|
|
(8
|
)
|
|
(5,993
|
)
|
|
(6,849
|
)
|
|||||
Other income (expense), net
|
384
|
|
|
(912
|
)
|
|
(36
|
)
|
|
45
|
|
|
21
|
|
|||||
Change in fair value of derivative liabilities
|
—
|
|
|
—
|
|
|
(6,741
|
)
|
|
(48,454
|
)
|
|
3,102
|
|
|||||
Total other expense, net
|
(2,793
|
)
|
|
(915
|
)
|
|
(6,785
|
)
|
|
(54,402
|
)
|
|
(3,726
|
)
|
|||||
Net income (loss) before income taxes
|
16,655
|
|
|
11,153
|
|
|
14,672
|
|
|
(50,700
|
)
|
|
(11,048
|
)
|
|||||
Income tax expense
|
(5,272
|
)
|
|
(3,545
|
)
|
|
(2,203
|
)
|
|
(92
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
11,383
|
|
|
$
|
7,608
|
|
|
$
|
12,469
|
|
|
$
|
(50,792
|
)
|
|
$
|
(11,048
|
)
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.11
|
|
|
$
|
0.07
|
|
|
$
|
0.12
|
|
|
$
|
(0.69
|
)
|
|
$
|
(0.19
|
)
|
Diluted
|
$
|
0.10
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
|
$
|
(0.69
|
)
|
|
$
|
(0.19
|
)
|
Weighed average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
105,791
|
|
|
112,276
|
|
|
102,696
|
|
|
73,173
|
|
|
57,373
|
|
|||||
Diluted
|
111,599
|
|
|
122,888
|
|
|
118,331
|
|
|
73,173
|
|
|
57,373
|
|
|
As of June 30,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
20,387
|
|
|
$
|
26,299
|
|
|
$
|
24,648
|
|
|
$
|
6,721
|
|
|
$
|
1,978
|
|
Working capital
|
17,271
|
|
|
25,375
|
|
|
22,800
|
|
|
(3,105
|
)
|
|
(2,104
|
)
|
|||||
Total assets
|
53,999
|
|
|
55,484
|
|
|
44,528
|
|
|
12,499
|
|
|
6,227
|
|
|||||
Current liabilities
|
22,702
|
|
|
20,566
|
|
|
16,028
|
|
|
13,380
|
|
|
5,131
|
|
|||||
Derivative liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
19,905
|
|
|
17,123
|
|
|||||
Long-term debt, net of unamortized discount
|
25,073
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total liabilities
|
50,009
|
|
|
21,539
|
|
|
16,245
|
|
|
33,307
|
|
|
22,402
|
|
|||||
Total stockholders equity (deficit)
|
3,990
|
|
|
33,945
|
|
|
28,283
|
|
|
(20,808
|
)
|
|
(16,175
|
)
|
•
|
Our scientifically-validated products, including our patented dietary supplement, Protandim
®
, and our new line of skin care products, LifeVantage TrueScience
®
;
|
|
Active Independent Distributors By Region
|
|
|
|
|
||||||||||||
|
As of June 30, 2014
|
|
As of June 30, 2013
|
|
Change from Prior Year
|
|
Percent Change
|
||||||||||
Americas
|
44,000
|
|
|
64.7
|
%
|
|
43,000
|
|
|
64.2
|
%
|
|
1,000
|
|
|
2.3
|
%
|
Asia/Pacific
|
24,000
|
|
|
35.3
|
%
|
|
24,000
|
|
|
35.8
|
%
|
|
—
|
|
|
—
|
%
|
|
68,000
|
|
|
100.0
|
%
|
|
67,000
|
|
|
100.0
|
%
|
|
1,000
|
|
|
1.5
|
%
|
|
Active Preferred Customers By Region
|
|
|
|
|
||||||||||||
|
As of June 30, 2014
|
|
As of June 30, 2013
|
|
Change from Prior Year
|
|
Percent Change
|
||||||||||
Americas
|
107,000
|
|
|
83.6
|
%
|
|
115,000
|
|
|
83.3
|
%
|
|
(8,000
|
)
|
|
(7.0
|
)%
|
Asia/Pacific
|
21,000
|
|
|
16.4
|
%
|
|
23,000
|
|
|
16.7
|
%
|
|
(2,000
|
)
|
|
(8.7
|
)%
|
|
128,000
|
|
|
100.0
|
%
|
|
138,000
|
|
|
100.0
|
%
|
|
(10,000
|
)
|
|
(7.2
|
)%
|
|
For the years ended June 30,
|
|||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
Americas
|
$
|
141,227
|
|
|
66.0
|
%
|
|
$
|
133,046
|
|
|
63.9
|
%
|
|
$
|
90,122
|
|
|
71.4
|
%
|
Asia/Pacific
|
72,741
|
|
|
34.0
|
%
|
|
75,132
|
|
|
36.1
|
%
|
|
36,061
|
|
|
28.6
|
%
|
|||
Total
|
$
|
213,968
|
|
|
100
|
%
|
|
$
|
208,178
|
|
|
100
|
%
|
|
$
|
126,183
|
|
|
100
|
%
|
|
For the years ended,
|
|||||||
|
June 30, 2014
|
|
June 30, 2013
|
|
June 30, 2012
|
|||
Revenue, net
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
15.5
|
|
|
15.3
|
|
|
14.3
|
|
Product recall costs
|
—
|
|
|
2.3
|
|
|
—
|
|
Gross profit
|
84.5
|
|
|
82.4
|
|
|
85.7
|
|
Operating expenses:
|
|
|
|
|
|
|||
Commission and incentives
|
48.9
|
|
|
48.9
|
|
|
45.9
|
|
Selling, general and administrative
|
26.5
|
|
|
27.7
|
|
|
22.8
|
|
Total operating expenses
|
75.4
|
|
|
76.6
|
|
|
68.7
|
|
Operating income
|
9.1
|
|
|
5.8
|
|
|
17.0
|
|
Other expense, net:
|
|
|
|
|
|
|||
Interest expense
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
Other income (expense), net
|
0.2
|
|
|
(0.4
|
)
|
|
—
|
|
Change in fair value of derivative liabilities
|
—
|
|
|
—
|
|
|
(5.4
|
)
|
Total other expense, net
|
(1.3
|
)
|
|
(0.4
|
)
|
|
(5.4
|
)
|
Net income before income taxes
|
7.8
|
|
|
5.4
|
|
|
11.6
|
|
Income tax expense
|
(2.5
|
)
|
|
(1.7
|
)
|
|
(1.7
|
)
|
Net income
|
5.3
|
%
|
|
3.7
|
%
|
|
9.9
|
%
|
|
For the years ended June 30,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% change
|
|||||
Japan
|
$
|
61,872
|
|
|
$
|
69,491
|
|
|
(11.0
|
)%
|
Hong Kong
|
7,347
|
|
|
2,478
|
|
|
196.5
|
%
|
||
Other
|
3,522
|
|
|
3,163
|
|
|
11.3
|
%
|
||
Asia/Pacific Total
|
$
|
72,741
|
|
|
$
|
75,132
|
|
|
(3.2
|
)%
|
|
For the years ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Contractual interest expense:
|
|
|
|
||||
2013 Term Loan
|
$
|
2,732
|
|
|
$
|
—
|
|
Amortization of deferred financing fees:
|
|
|
|
||||
2013 Term Loan
|
158
|
|
|
—
|
|
||
Amortization of debt discount:
|
|
|
|
||||
2013 Term Loan
|
123
|
|
|
—
|
|
||
Other
|
164
|
|
|
3
|
|
||
Total interest expense
|
$
|
3,177
|
|
|
$
|
3
|
|
|
For the years ended June 30,
|
|
|
|||||||
|
2013
|
|
2012
|
|
% change
|
|||||
Japan
|
$
|
69,491
|
|
|
$
|
35,449
|
|
|
96.0
|
%
|
Hong Kong
|
2,478
|
|
|
—
|
|
|
100.0
|
%
|
||
Other
|
3,163
|
|
|
612
|
|
|
416.8
|
%
|
||
Asia/Pacific Total
|
$
|
75,132
|
|
|
$
|
36,061
|
|
|
108.3
|
%
|
•
|
Have a consolidated EBITDA (as defined in the Financing Agreement) amount greater than
$14.9 million
for the three consecutive fiscal quarters ending
June 30, 2014
. Our consolidated EBITDA requirement increases over time to
$25.6 million
for the four consecutive fiscal quarters ending June 30, 2016 and each period of four consecutive fiscal quarters ending each September 30, December 31, March 31, and June 30, thereafter.
|
•
|
Have a total leverage ratio (as defined in the Financing Agreement) of less than
2.08
to
1.00
for the quarter ended
June 30, 2014
. Our leverage ratio requirement decreases over time to
1.25
to
1.00
for the quarter ended
June 30, 2016
, and remains level thereafter;
|
•
|
Have a fixed charge ratio (as defined in the Financing Agreement) of greater than
1.20
to
1.00
for the three consecutive fiscal quarters ending
June 30, 2014
. Our fixed charge requirement remains level through the quarter ended
December 31, 2014
, after which it increases to
1.25
to
1.00
thereafter; and
|
•
|
Have no less than $10 million in unrestricted cash and cash equivalents at any time when the total leverage ratio is greater than
1.25
to
1.00
.
|
|
Payments due by period
|
|
|
||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
Thereafter
|
||||||||||
Long-term debt obligations
|
$
|
30,825
|
|
|
$
|
4,700
|
|
|
$
|
14,100
|
|
|
$
|
12,025
|
|
|
$
|
—
|
|
Interest on long-term debt obligations
|
8,306
|
|
|
2,619
|
|
|
5,361
|
|
|
326
|
|
|
—
|
|
|||||
Operating lease obligations
|
15,886
|
|
|
2,320
|
|
|
5,925
|
|
|
3,870
|
|
|
3,771
|
|
|||||
Total
|
$
|
55,017
|
|
|
$
|
9,639
|
|
|
$
|
25,386
|
|
|
$
|
16,222
|
|
|
$
|
3,771
|
|
|
Year ended June 30, 2014
|
|
Year ended June 30, 2013
|
||||||||||||||||||||
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Japan
|
98.93
|
|
|
100.41
|
|
|
102.83
|
|
|
102.15
|
|
|
78.70
|
|
|
81.04
|
|
|
92.25
|
|
|
98.77
|
|
Australia
|
1.09
|
|
|
1.08
|
|
|
1.12
|
|
|
1.07
|
|
|
0.96
|
|
|
0.96
|
|
|
0.96
|
|
|
1.01
|
|
Hong Kong
|
7.76
|
|
|
7.75
|
|
|
7.76
|
|
|
7.75
|
|
|
7.75
|
|
|
7.75
|
|
|
7.76
|
|
|
7.76
|
|
Mexico
|
12.91
|
|
|
13.02
|
|
|
13.24
|
|
|
13.00
|
|
|
13.17
|
|
|
12.95
|
|
|
12.65
|
|
|
12.47
|
|
Canada
|
1.04
|
|
|
1.05
|
|
|
1.10
|
|
|
1.09
|
|
|
0.99
|
|
|
0.99
|
|
|
1.01
|
|
|
1.02
|
|
1.
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
|
2.
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
|
3.
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
LifeVantage Corporation.
a Colorado corporation
|
|
|
|
By:
|
/s/ Douglas C. Robinson
|
|
Douglas C. Robinson
|
Its:
|
President and Chief Executive Officer
|
Date:
|
September 10, 2014
|
Signature
|
|
Date
|
|
Title
|
|
|
|
|
|
/s/ Douglas C. Robinson
|
|
September 10, 2014
|
|
President and Chief Executive Officer; Director
(Principal Executive Officer)
|
Douglas C. Robinson
|
|
|
|
|
|
|
|
|
|
/s/ David S. Colbert
|
|
September 10, 2014
|
|
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
|
David S. Colbert
|
|
|
|
|
|
|
|
|
|
/s/ Garry Mauro
|
|
September 10, 2014
|
|
Chairman of the Board
|
Garry Mauro
|
|
|
|
|
|
|
|
|
|
/s/ Michael A. Beindorff
|
|
September 10, 2014
|
|
Director
|
Michael A. Beindorff
|
|
|
|
|
|
|
|
|
|
/s/ Dave Manovich
|
|
September 10, 2014
|
|
Director
|
Dave Manovich
|
|
|
|
|
|
|
|
|
|
/s/ George E. Metzger
|
|
September 10, 2014
|
|
Director
|
George E. Metzger
|
|
|
|
|
|
|
|
|
|
/s/ Richard Okumoto
|
|
September 10, 2014
|
|
Director
|
Richard Okumoto
|
|
|
|
|
Exhibit
No.
|
|
Document Description
|
|
Filed Herewith or Incorporated by Reference From
|
|
|
|
|
|
3.1
|
|
Amended and Restated Articles of Incorporation
|
|
Exhibit to Form 10-K for the fiscal year ended June 30, 2011 filed on September 28, 2011.
|
|
|
|
|
|
3.2(a)
|
|
Amended and Restated Bylaws
|
|
Exhibit to Form 10-K for the fiscal year ended June 30, 2011, filed on September 28, 2011.
|
|
|
|
|
|
3.2(b)
|
|
First Amendment of the Amended and Restated Bylaws
|
|
Exhibit to Form 8-K filed on May 31, 2012.
|
|
|
|
|
|
4.1
|
|
Form of Warrant issued in connection with November 2009 Financing
|
|
Exhibit to Form 8-K filed on November 18, 2009.
|
|
|
|
|
|
4.2
|
|
Amendment to Debentures and Warrants, dated as of December 11, 2009
|
|
Exhibit to Form 10-Q for the fiscal quarter ended December 31, 2010 filed on February 16, 2010.
|
|
|
|
|
|
4.3
|
|
Form of Restated Warrant issued pursuant to Amended and Restated Securities Purchase Agreement dated December 11, 2009
|
|
Exhibit to Form 10-Q for the fiscal quarter ended December 31, 2009 filed on February 16, 2010.
|
|
|
|
|
|
4.4
|
|
Form of Common Stock Purchase Warrant issued on each of December 31, 2009, January 20, 2010, February 4, 2010 and February 26, 2010
|
|
Exhibit to Form 10-Q for the fiscal quarter ended March 31, 2010 filed on May 14, 2010.
|
|
|
|
|
|
4.5
|
|
Form of LifeVantage Corporation Amendment to Warrant
|
|
Exhibit to Schedule TO filed on November 29, 2011.
|
|
|
|
|
|
10.1
|
|
Manufacturing and Supply Agreement dated July 1, 2008 between Cornerstone Research and Development and LifeVantage Corporation
|
|
Exhibit to Form 10-K/A for the fiscal year ended June 30, 2009 filed October 28, 2009.
|
|
|
|
|
|
10.2#
|
|
LifeVantage Distributor Compensation Plan
|
|
Exhibit to Form 10-K for the fiscal year ended June 30, 2010 filed on September 15, 2010.
|
|
|
|
|
|
10.3#
|
|
Form of Securities Purchase Agreement entered into in connection with November 2009 Financing
|
|
Exhibit to Form 8-K filed on November 18, 2009.
|
|
|
|
|
|
10.4
|
|
Form of Amended and Restated Securities Purchase Agreement originally dated December 11, 2009
|
|
Exhibit to Form 10-Q for the fiscal quarter ended December 31, 2009 filed on February 16, 2010.
|
|
|
|
|
|
10.5
|
|
Amended and Restated Securities Purchase Agreement dated December 31, 2009, among LifeVantage Corporation and the purchaser parties thereto
|
|
Exhibit to Form 10-Q for the fiscal quarter ended March 31, 2010 filed on May 14, 2010.
|
|
|
|
|
|
10.6
|
|
Amended and Restated Securities Purchase Agreement dated January 20, 2010, among LifeVantage Corporation and the purchaser parties thereto
|
|
Exhibit to Form 10-Q for the fiscal quarter ended March 31, 2010 filed on May 14, 2010.
|
|
|
|
|
|
10.7
|
|
Amended and Restated Securities Purchase Agreement dated February 4, 2010, among LifeVantage Corporation and the purchaser parties thereto
|
|
Exhibit to Form 10-Q for the fiscal quarter ended March 31, 2010 filed on May 14, 2010.
|
|
|
|
|
|
10.8
|
|
Amended and Restated Securities Purchase Agreement dated February 26, 2010, among LifeVantage Corporation and the purchaser parties thereto
|
|
Exhibit to Form 10-Q for the fiscal quarter ended March 31, 2010 filed on May 14, 2010.
|
Exhibit
No.
|
|
Document Description
|
|
Filed Herewith or Incorporated by Reference From
|
|
|
|
|
|
10.9#
|
|
LifeVantage Corporation 2007 Long-Term Incentive Plan
|
|
Appendix B to Proxy Statement filed on Schedule 14A filed on October 20, 2006.
|
|
|
|
|
|
10.10(a)#
|
|
LifeVantage Corporation 2010 Long-Term Incentive Plan effective as of September 27, 2010 and as amended on January 10, 2012
|
|
Exhibit to Form 8-K filed on January 17, 2012.
|
|
|
|
|
|
10.10(b)#
|
|
Form of Nonstatutory Stock Option Agreement for the LifeVantage Corporation 2010 Long-Term Incentive Plan
|
|
Exhibit to Registration Statement on Form S-8 (File No. 333-175104) filed on June 23, 2011.
|
|
|
|
|
|
10.10(c)#
|
|
Form of Incentive Stock Option Agreement for the LifeVantage Corporation 2010 Long-Term Incentive Plan
|
|
Exhibit to Registration Statement on Form S-8 (File No. 333-175104) filed on June 23, 2011.
|
|
|
|
|
|
10.11#
|
|
LifeVantage Corporation FY 2014 Annual Incentive Plan
|
|
Exhibit to Form 10-K for the fiscal year ended June 30, 2013 filed on September 12, 2013.
|
|
|
|
|
|
10.12#
|
|
LifeVantage Corporation FY 2014 Sales Incentive Plan
|
|
Exhibit to Form 10-K for the fiscal year ended June 30, 2013 filed on September 12, 2013.
|
|
|
|
|
|
10.13#
|
|
LifeVantage Corporation FY2015 Annual Incentive Plan
|
|
Filed herewith
.
|
|
|
|
|
|
10.14#
|
|
LifeVantage Corporation FY2015 Sales Incentive Plan
|
|
Filed herewith
.
|
|
|
|
|
|
10.15#
|
|
LifeVantage Corporation Cash Settled Performance-Based Long Term Incentive Plan
|
|
Exhibit to Form 10-K for the fiscal year ended June 30, 2013 filed on September 12, 2013.
|
|
|
|
|
|
10.16#
|
|
Form of Performance Unit Agreement
|
|
Exhibit to Form 10-K for the fiscal year ended June 30, 2013 filed on September 12, 2013.
|
|
|
|
|
|
10.17#
|
|
Separation Agreement and General Release effective as of June 18, 2013 between LifeVantage Corporation and Dr. Joe McCord
|
|
Exhibit to Form 8-K filed on June 25, 2013.
|
|
|
|
|
|
10.18#
|
|
Amended and Restated Employment Agreement between LifeVantage Corporation and Douglas C. Robinson dated effective March 24, 2014
|
|
Exhibit to Form 10-Q for the fiscal quarter ended March 31, 2014 filed on May 6, 2014.
|
|
|
|
|
|
10.19#
|
|
Employment Agreement between David Colbert and Lifevantage Corporation effective August 1, 2012
|
|
Exhibit to Form 8-K filed on August 6, 2012.
|
|
|
|
|
|
10.20#
|
|
Employment Agreement by and between Robert Urban and Lifevantage Corporation effective as of May 29, 2012
|
|
Exhibit to Form 8-K filed on May 31, 2012.
|
|
|
|
|
|
10.21#
|
|
Employment Agreement by and between Rob Cutler and LifeVantage Corporation effective March 21, 2012
|
|
Exhibit to Form 10-K for the fiscal year ended June 30, 2013 filed on September 12, 2013.
|
|
|
|
|
|
Exhibit
No.
|
|
Document Description
|
|
Filed Herewith or Incorporated by Reference From
|
10.22#
|
|
Key Executive Benefit Package by and between Kirby Zenger and LifeVantage Corporation effective as of October 2, 2012
|
|
Exhibit to Form 8-K filed on October 3, 2012.
|
|
|
|
|
|
10.23
|
|
Lease dated September 22, 2011 between Sandy Park I L.L.C. and LifeVantage Corporation
|
|
Exhibit to Form 10-Q for the fiscal quarter ended September 30, 2011 filed on November 14, 2011.
|
|
|
|
|
|
10.24
|
|
Lease dated September 20, 2012 between Sandy Park II L.L.C. and LifeVantage Corporation
|
|
Exhibit to Form 10-Q for the fiscal quarter ended September 30, 2012 filed on November 8, 2012.
|
|
|
|
|
|
10.25
|
|
First Amendment to Lease entered into as of March 24, 2014 between Sandy Park II L.L.C. and LifeVantage Corporation
|
|
Exhibit to Form 10-Q for the fiscal quarter ended March 31, 2014 filed on May 6, 2014.
|
|
|
|
|
|
10.26**
|
|
Commercial Supply Agreement dated January 31, 2014 between LifeVantage Corporation and Deseret Laboratories, Inc.
|
|
Exhibit to Form 10-Q for the fiscal quarter ended March 31, 2014 filed on May 6, 2014.
|
|
|
|
|
|
10.27**
|
|
Software Service Agreement with JIA, Inc. dated September 28, 2012
|
|
Exhibit to Form 10-Q/A for the fiscal quarter ended March 31, 2013 filed on May 24, 2013.
|
|
|
|
|
|
10.28**
|
|
Software Service Agreement with JIA, Inc. dated September 28, 2012
|
|
Exhibit to Form 10-Q/A for the fiscal quarter ended March 31, 2013 filed on May 24, 2013.
|
|
|
|
|
|
10.29***
|
|
Service Agreement entered into as of June 1, 2014 between IntegraCore, LLC and LifeVantage
|
|
Filed herewith.
|
|
|
|
|
|
10.30***
|
|
Commercial Supply Agreement entered into as of May 30, 2014 between LifeVantage Corporation and Wasatch Product Development
|
|
Filed herewith.
|
|
|
|
|
|
21.1
|
|
List of Subsidiaries.
|
|
Filed herewith.
|
|
|
|
|
|
23.1
|
|
Consent of Ehrhardt Keefe Steiner & Hottman PC.
|
|
Filed herewith.
|
|
|
|
|
|
24.1
|
|
Power of Attorney
|
|
Signature page to this report
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Furnished herewith.
|
|
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Furnished herewith.
|
|
|
|
|
|
Exhibit
No.
|
|
Document Description
|
|
Filed Herewith or Incorporated by Reference From
|
101*
|
|
The following financial information from the registrant’s Annual Report on Form 10-K for the year ended June 30, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Other Comprehensive Income; (iii) Condensed Consolidated Statement of Stockholders’ Deficit; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.
|
|
Furnished herewith.
|
#
|
Management contract or compensatory plan.
|
*
|
Users of this data are advised that pursuant to Rule 406T of Regulation S-T, this XBRL information is being furnished and not filed herewith for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and Sections 11 or 12 of the Securities Act of 1933, as amended, and is not to be incorporated by reference into any filing, or part of any registration statement or prospectus, of LifeVantage Corporation, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
|
**
|
Confidential treatment has been granted by the SEC with respect to certain portions of these exhibits.
|
***
|
The Company has requested confidential treatment for portions of this agreement. Accordingly, certain portions of this agreement have been omitted in the version filed with this report and such confidential portions have been filed with the SEC.
|
|
June 30,
|
||||||
|
2014
|
|
2013
|
||||
(In thousands, except per share data)
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
20,387
|
|
|
$
|
26,299
|
|
Accounts receivable
|
1,317
|
|
|
1,789
|
|
||
Income tax receivable
|
4,681
|
|
|
2,150
|
|
||
Inventory
|
8,826
|
|
|
10,524
|
|
||
Current deferred income tax asset
|
158
|
|
|
2,885
|
|
||
Prepaid expenses and deposits
|
4,604
|
|
|
2,294
|
|
||
Total current assets
|
39,973
|
|
|
45,941
|
|
||
|
|
|
|
||||
Property and equipment, net
|
6,941
|
|
|
5,692
|
|
||
Intangible assets, net
|
2,014
|
|
|
1,747
|
|
||
Deferred debt offering costs, net
|
1,353
|
|
|
—
|
|
||
Long-term deferred income tax asset
|
1,285
|
|
|
730
|
|
||
Other long-term assets
|
2,433
|
|
|
1,374
|
|
||
TOTAL ASSETS
|
$
|
53,999
|
|
|
$
|
55,484
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
2,854
|
|
|
$
|
5,171
|
|
Commissions payable
|
7,594
|
|
|
7,564
|
|
||
Other accrued expenses
|
7,554
|
|
|
7,831
|
|
||
Current portion of long-term debt
|
4,700
|
|
|
—
|
|
||
Total current liabilities
|
22,702
|
|
|
20,566
|
|
||
|
|
|
|
||||
Long-term debt
|
|
|
|
||||
Principal amount
|
26,125
|
|
|
—
|
|
||
Less: unamortized discount
|
(1,052
|
)
|
|
—
|
|
||
Long-term debt, net of unamortized discount
|
25,073
|
|
|
—
|
|
||
Other long-term liabilities
|
2,234
|
|
|
973
|
|
||
Total liabilities
|
50,009
|
|
|
21,539
|
|
||
Commitments and contingencies- Note 11
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock — par value $0.001, 50,000 shares authorized, no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock — par value $0.001, 250,000 shares authorized and 102,173 and 117,088 issued and outstanding as of June 30, 2014 and 2013, respectively
|
102
|
|
|
121
|
|
||
Additional paid-in capital
|
115,244
|
|
|
110,413
|
|
||
Accumulated deficit
|
(111,240
|
)
|
|
(76,476
|
)
|
||
Accumulated other comprehensive loss
|
(116
|
)
|
|
(113
|
)
|
||
Total stockholders’ equity
|
3,990
|
|
|
33,945
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
53,999
|
|
|
$
|
55,484
|
|
|
For the years ended June 30,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
(In thousands, except per share data)
|
|
|
|
|
|
||||||
Revenue, net
|
$
|
213,968
|
|
|
$
|
208,178
|
|
|
$
|
126,183
|
|
Cost of sales
|
33,194
|
|
|
31,845
|
|
|
18,052
|
|
|||
Product recall costs
|
—
|
|
|
4,798
|
|
|
—
|
|
|||
Gross profit
|
180,774
|
|
|
171,535
|
|
|
108,131
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Commission and incentives
|
104,525
|
|
|
101,737
|
|
|
57,955
|
|
|||
Selling, general and administrative
|
56,801
|
|
|
57,730
|
|
|
28,719
|
|
|||
Total operating expenses
|
161,326
|
|
|
159,467
|
|
|
86,674
|
|
|||
Operating income
|
19,448
|
|
|
12,068
|
|
|
21,457
|
|
|||
Other expense, net
|
|
|
|
|
|
||||||
Interest expense
|
(3,177
|
)
|
|
(3
|
)
|
|
(8
|
)
|
|||
Other income (expense), net
|
384
|
|
|
(912
|
)
|
|
(36
|
)
|
|||
Change in fair value of derivative liabilities
|
—
|
|
|
—
|
|
|
(6,741
|
)
|
|||
Total other expense, net
|
(2,793
|
)
|
|
(915
|
)
|
|
(6,785
|
)
|
|||
Net income before income taxes
|
16,655
|
|
|
11,153
|
|
|
14,672
|
|
|||
Income tax expense
|
(5,272
|
)
|
|
(3,545
|
)
|
|
(2,203
|
)
|
|||
Net income
|
$
|
11,383
|
|
|
$
|
7,608
|
|
|
$
|
12,469
|
|
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.11
|
|
|
$
|
0.07
|
|
|
$
|
0.12
|
|
Diluted
|
$
|
0.10
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
105,791
|
|
|
112,276
|
|
|
102,696
|
|
|||
Diluted
|
111,599
|
|
|
122,888
|
|
|
118,331
|
|
|||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(3
|
)
|
|
(92
|
)
|
|
38
|
|
|||
Other comprehensive income (loss), net of tax:
|
(3
|
)
|
|
(92
|
)
|
|
38
|
|
|||
Comprehensive income
|
$
|
11,380
|
|
|
$
|
7,516
|
|
|
$
|
12,507
|
|
|
Common Stock
|
|
Additional
Paid-In Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances, June 30, 2011
|
98,794
|
|
|
$
|
99
|
|
|
$
|
67,606
|
|
|
$
|
(88,454
|
)
|
|
$
|
(59
|
)
|
|
$
|
(20,808
|
)
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
1,323
|
|
|
—
|
|
|
—
|
|
|
1,323
|
|
|||||
Exercise of options and warrants
|
11,909
|
|
|
12
|
|
|
19,747
|
|
|
—
|
|
|
—
|
|
|
19,759
|
|
|||||
Issuance of shares related to restricted stock
|
149
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Repurchase of company stock
|
(678
|
)
|
|
—
|
|
|
—
|
|
|
(976
|
)
|
|
—
|
|
|
(976
|
)
|
|||||
Reclassification of liability warrants
|
—
|
|
|
—
|
|
|
16,478
|
|
|
—
|
|
|
—
|
|
|
16,478
|
|
|||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
38
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
12,469
|
|
|
—
|
|
|
12,469
|
|
|||||
Balances, June 30, 2012
|
110,174
|
|
|
$
|
111
|
|
|
$
|
105,154
|
|
|
$
|
(76,961
|
)
|
|
$
|
(21
|
)
|
|
$
|
28,283
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,169
|
|
|
—
|
|
|
—
|
|
|
2,169
|
|
|||||
Exercise of options and warrants
|
7,270
|
|
|
7
|
|
|
3,093
|
|
|
—
|
|
|
—
|
|
|
3,100
|
|
|||||
Issuance of shares related to restricted stock
|
2,616
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Repurchase of company stock
|
(2,972
|
)
|
|
—
|
|
|
—
|
|
|
(7,123
|
)
|
|
—
|
|
|
(7,123
|
)
|
|||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(92
|
)
|
|
(92
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
7,608
|
|
|
—
|
|
|
7,608
|
|
|||||
Balances, June 30, 2013
|
117,088
|
|
|
$
|
121
|
|
|
$
|
110,413
|
|
|
$
|
(76,476
|
)
|
|
$
|
(113
|
)
|
|
$
|
33,945
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,606
|
|
|
—
|
|
|
—
|
|
|
2,606
|
|
|||||
Exercise of options and warrants
|
5,185
|
|
|
5
|
|
|
2,225
|
|
|
—
|
|
|
—
|
|
|
2,230
|
|
|||||
Issuance of shares related to restricted stock
|
225
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares canceled or surrendered as payment of tax withholding
|
(686
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Repurchase of company stock
|
(19,639
|
)
|
|
(24
|
)
|
|
—
|
|
|
(46,147
|
)
|
|
—
|
|
|
(46,171
|
)
|
|||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
11,383
|
|
|
—
|
|
|
11,383
|
|
|||||
Balances, June 30, 2014
|
102,173
|
|
|
$
|
102
|
|
|
$
|
115,244
|
|
|
$
|
(111,240
|
)
|
|
$
|
(116
|
)
|
|
$
|
3,990
|
|
|
For the years ended June 30,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
(In thousands)
|
|
|
|
|
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
11,383
|
|
|
$
|
7,608
|
|
|
$
|
12,469
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
2,118
|
|
|
1,659
|
|
|
521
|
|
|||
Loss on disposal of equipment
|
—
|
|
|
—
|
|
|
37
|
|
|||
Stock-based compensation
|
2,953
|
|
|
2,169
|
|
|
1,323
|
|
|||
Amortization of deferred financing fees
|
159
|
|
|
—
|
|
|
—
|
|
|||
Amortization of debt discount
|
122
|
|
|
—
|
|
|
—
|
|
|||
Impairment of inventory
|
—
|
|
|
3,923
|
|
|
—
|
|
|||
Deferred income tax
|
2,172
|
|
|
(892
|
)
|
|
(2,723
|
)
|
|||
Change in fair value of derivative liabilities
|
—
|
|
|
—
|
|
|
6,741
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Decrease/(increase) in receivables
|
(2,044
|
)
|
|
(3,653
|
)
|
|
609
|
|
|||
Decrease/(increase) in inventory
|
1,646
|
|
|
(3,356
|
)
|
|
(9,228
|
)
|
|||
Increase in prepaid expenses and deposits
|
(2,318
|
)
|
|
(1,065
|
)
|
|
(762
|
)
|
|||
Increase in long-term assets
|
(1,045
|
)
|
|
(1,168
|
)
|
|
(310
|
)
|
|||
Increase/(decrease) in accounts payable
|
(2,384
|
)
|
|
1,593
|
|
|
2,936
|
|
|||
Increase/(decrease) in accrued expenses
|
(537
|
)
|
|
3,403
|
|
|
7,581
|
|
|||
Increase/(decrease) in other long-term liabilities
|
(120
|
)
|
|
441
|
|
|
195
|
|
|||
Net Cash Provided by Operating Activities
|
12,105
|
|
|
10,662
|
|
|
19,389
|
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Redemption of marketable securities
|
—
|
|
|
—
|
|
|
350
|
|
|||
Purchase of equipment
|
(1,898
|
)
|
|
(5,080
|
)
|
|
(2,194
|
)
|
|||
Purchase of intangible assets
|
(350
|
)
|
|
—
|
|
|
(52
|
)
|
|||
Net Cash Used in Investing Activities
|
(2,248
|
)
|
|
(5,080
|
)
|
|
(1,896
|
)
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Proceeds from term loan
|
45,825
|
|
|
—
|
|
|
—
|
|
|||
Payment of deferred financing fees
|
(1,511
|
)
|
|
—
|
|
|
—
|
|
|||
Net payments on revolving line of credit and accrued interest
|
—
|
|
|
—
|
|
|
(434
|
)
|
|||
Excess tax benefits from stock-based compensation
|
655
|
|
|
1,406
|
|
|
388
|
|
|||
Repurchase of company stock
|
(46,171
|
)
|
|
(7,123
|
)
|
|
(976
|
)
|
|||
Payment on term loan
|
(16,175
|
)
|
|
—
|
|
|
—
|
|
|||
Exercise of options and warrants
|
1,573
|
|
|
1,694
|
|
|
1,768
|
|
|||
Net Cash Provided by (Used in) Financing Activities
|
(15,804
|
)
|
|
(4,023
|
)
|
|
746
|
|
|||
Foreign Currency Effect on cash
|
35
|
|
|
92
|
|
|
38
|
|
|||
Increase (Decrease) in cash and cash equivalents
|
(5,912
|
)
|
|
1,651
|
|
|
18,277
|
|
|||
Cash and Cash Equivalents — beginning of period
|
26,299
|
|
|
24,648
|
|
|
6,371
|
|
|||
Cash and Cash Equivalents — end of period
|
20,387
|
|
|
26,299
|
|
|
24,648
|
|
|
For the years ended June 30,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Non Cash Investing and Financing Activities:
|
|
|
|
|
|
||||||
Exercise of warrant liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,604
|
|
Increase in property and equipment/other long-term liabilities
|
$
|
1,386
|
|
|
$
|
359
|
|
|
$
|
—
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
2,758
|
|
|
$
|
3
|
|
|
$
|
—
|
|
Cash paid for income taxes
|
$
|
4,879
|
|
|
$
|
6,090
|
|
|
$
|
3,701
|
|
Common stock shares issued upon cashless warrant exercises
|
2,698
|
|
|
3,793
|
|
|
10,297
|
|
|||
Total cashless exercise price of warrants
|
$
|
1,615
|
|
|
$
|
2,147
|
|
|
$
|
5,995
|
|
Gross warrants underlying cashless exercises
|
3,409
|
|
|
4,564
|
|
|
12,563
|
|
|
Years
|
Equipment (includes computer hardware and software)
|
3
|
Furniture and fixtures
|
5
|
Leasehold improvements
|
*
|
Vehicles
|
5
|
|
Year ended June 30,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
11,383
|
|
|
$
|
7,608
|
|
|
$
|
12,469
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic weighted-average common shares outstanding
|
105,791
|
|
|
112,276
|
|
|
102,696
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Stock awards and options
|
2,652
|
|
|
3,832
|
|
|
5,516
|
|
|||
Warrants
|
3,156
|
|
|
6,780
|
|
|
10,119
|
|
|||
Diluted weighted-average common shares outstanding
|
111,599
|
|
|
122,888
|
|
|
118,331
|
|
|||
Basic
|
$
|
0.11
|
|
|
$
|
0.07
|
|
|
$
|
0.12
|
|
Diluted
|
$
|
0.10
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
|
Years ended June 30,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Americas
|
$
|
141,227
|
|
|
$
|
133,046
|
|
|
$
|
90,122
|
|
Asia/Pacific
|
72,741
|
|
|
75,132
|
|
|
36,061
|
|
|||
Total revenues
|
$
|
213,968
|
|
|
$
|
208,178
|
|
|
$
|
126,183
|
|
|
June 30,
|
||||||
|
2014
|
|
2013
|
||||
Equipment (includes computer hardware and software)
|
$
|
6,354
|
|
|
$
|
5,501
|
|
Furniture and fixtures
|
1,428
|
|
|
976
|
|
||
Leasehold improvements
|
3,095
|
|
|
1,220
|
|
||
Vehicles
|
142
|
|
|
142
|
|
||
Accumulated depreciation
|
(4,078
|
)
|
|
(2,147
|
)
|
||
Total property and equipment, net
|
$
|
6,941
|
|
|
$
|
5,692
|
|
|
June 30,
|
||||||
|
2014
|
|
2013
|
||||
Patent costs
|
$
|
2,330
|
|
|
$
|
2,321
|
|
Accumulated amortization
|
(911
|
)
|
|
(776
|
)
|
||
Total definite-lived intangible assets, net
|
$
|
1,419
|
|
|
$
|
1,545
|
|
|
|
|
|
||||
Trademarks and other indefinite-lived intangible assets
|
$
|
595
|
|
|
$
|
202
|
|
Total intangible assets, net
|
$
|
2,014
|
|
|
$
|
1,747
|
|
|
June 30,
|
||||||
|
2014
|
|
2013
|
||||
Accrued severance
|
$
|
150
|
|
|
$
|
1,602
|
|
Accrued incentives and promotions to distributors
|
829
|
|
|
1,122
|
|
||
Accrued payroll and other employee expenses
|
1,382
|
|
|
1,387
|
|
||
Deferred revenue
|
887
|
|
|
545
|
|
||
Accrued payable to vendors
|
910
|
|
|
352
|
|
||
Other taxes payable
|
1,894
|
|
|
944
|
|
||
Reserve for sales returns
|
635
|
|
|
648
|
|
||
Accrued other expenses
|
867
|
|
|
1,231
|
|
||
Total other accrued expenses
|
$
|
7,554
|
|
|
$
|
7,831
|
|
Year ending June 30,
|
Amount
|
||
2015
|
$
|
4,700
|
|
2016
|
4,700
|
|
|
2017
|
4,700
|
|
|
2018
|
4,700
|
|
|
2019
|
4,700
|
|
|
Thereafter
|
7,325
|
|
|
|
$
|
30,825
|
|
|
Options (in thousands)
|
|
Weighted
Average
Exercise Price
|
|
Weighted
Average Remaining
Contractual Term (in years)
|
|
Aggregate Intrinsic Value
(in thousands)
|
|||||
Outstanding at June 30, 2011
|
10,498
|
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Granted
|
2,086
|
|
|
$
|
1.89
|
|
|
|
|
|
|
|
Exercised
|
(1,612
|
)
|
|
0.45
|
|
|
|
|
$
|
2,038
|
|
|
Forfeited
|
(27
|
)
|
|
1.36
|
|
|
|
|
|
|||
Expired or Cancelled
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding at June 30, 2012
|
10,945
|
|
|
0.91
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|||||
Granted
|
152
|
|
|
$
|
2.82
|
|
|
|
|
|
|
|
Exercised
|
(3,319
|
)
|
|
0.49
|
|
|
|
|
$
|
7,128
|
|
|
Forfeited
|
(768
|
)
|
|
1.54
|
|
|
|
|
|
|||
Expired or Cancelled
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding at June 30, 2013
|
7,010
|
|
|
1.08
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|||||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Exercised
|
(1,400
|
)
|
|
0.69
|
|
|
|
|
$
|
2,282
|
|
|
Forfeited
|
(469
|
)
|
|
1.84
|
|
|
|
|
|
|||
Expired or Cancelled
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding at June 30, 2014
|
5,141
|
|
|
1.18
|
|
|
6.07
|
|
$
|
2,417
|
|
|
Exercisable at June 30, 2014
|
4,795
|
|
|
$
|
1.08
|
|
|
6.17
|
|
$
|
2,411
|
|
Nonvested Shares
|
|
Shares (in thousands)
|
|
Weighted Average Grant Date Fair Value
|
|||
Nonvested at June 30, 2011
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|||
Granted
|
|
164
|
|
|
$
|
3.34
|
|
Vested
|
|
—
|
|
|
—
|
|
|
Forfeited
|
|
(2
|
)
|
|
3.36
|
|
|
Nonvested at June 30, 2012
|
|
162
|
|
|
3.34
|
|
|
Vested at June 30, 2012
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|||
Granted
|
|
2,808
|
|
|
$
|
2.62
|
|
Vested
|
|
(37
|
)
|
|
3.34
|
|
|
Forfeited
|
|
(196
|
)
|
|
3.25
|
|
|
Nonvested at June 30, 2013
|
|
2,737
|
|
|
2.61
|
|
|
Vested at June 30, 2013
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|||
Granted
|
|
225
|
|
|
$
|
1.79
|
|
Vested
|
|
(760
|
)
|
|
2.65
|
|
|
Forfeited
|
|
(478
|
)
|
|
2.55
|
|
|
Nonvested at June 30, 2014
|
|
1,724
|
|
|
2.46
|
|
|
Vested at June 30, 2014
|
|
—
|
|
|
—
|
|
|
Number of Units (in thousands)
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding at June 30, 2013, nonvested
|
—
|
|
|
$
|
—
|
|
Granted
|
245
|
|
|
1.48
|
|
|
Vested
|
(214
|
)
|
|
—
|
|
|
Forfeited
|
(31
|
)
|
|
1.51
|
|
|
Outstanding at June 30, 2014, nonvested
|
—
|
|
|
|
|
Common
Stock
Warrants
|
|
Outstanding and exercisable, June 30, 2011
|
25,460
|
|
|
|
|
Issued
|
270
|
|
Cancelled
|
—
|
|
Exercised
|
(12,563
|
)
|
Expired
|
(203
|
)
|
Outstanding and exercisable at June 30, 2012
|
12,964
|
|
|
|
|
Issued
|
—
|
|
Cancelled
|
—
|
|
Exercised
|
(4,723
|
)
|
Expired
|
—
|
|
Outstanding and exercisable at June 30, 2013
|
8,241
|
|
|
|
|
Issued
|
—
|
|
Cancelled
|
—
|
|
Exercised
|
(3,996
|
)
|
Expired
|
—
|
|
Outstanding and exercisable at June 30, 2014
|
4,245
|
|
|
Year ended June 30,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Business development incentive, net
|
$
|
666
|
|
|
$
|
695
|
|
|
$
|
—
|
|
Foreign currency transaction loss, net
|
(194
|
)
|
|
(1,689
|
)
|
|
(102
|
)
|
|||
Gain on settlement of forward contract
|
8
|
|
|
42
|
|
|
—
|
|
|||
Other income (expense), net
|
(96
|
)
|
|
40
|
|
|
66
|
|
|||
Total other income (expense), net
|
$
|
384
|
|
|
$
|
(912
|
)
|
|
$
|
(36
|
)
|
|
2014
|
|
2013
|
|
2012
|
||||||
Income / (Loss) Before Income Taxes:
|
|
|
|
|
|
||||||
Domestic
|
$
|
13,894
|
|
|
$
|
11,250
|
|
|
$
|
14,556
|
|
International
|
2,761
|
|
|
(97
|
)
|
|
116
|
|
|||
|
$
|
16,655
|
|
|
$
|
11,153
|
|
|
$
|
14,672
|
|
Current Taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
2,010
|
|
|
$
|
4,087
|
|
|
$
|
3,758
|
|
State
|
72
|
|
|
383
|
|
|
1,121
|
|
|||
Foreign
|
1,018
|
|
|
(33
|
)
|
|
47
|
|
|||
Total Current Income Tax Provision
|
$
|
3,100
|
|
|
$
|
4,437
|
|
|
$
|
4,926
|
|
Deferred Taxes:
|
|
|
|
|
|
||||||
Federal
|
2,299
|
|
|
(706
|
)
|
|
(2,110
|
)
|
|||
State
|
83
|
|
|
(77
|
)
|
|
(601
|
)
|
|||
Foreign
|
(210
|
)
|
|
(109
|
)
|
|
(12
|
)
|
|||
Total Deferred Income Tax Provision
|
$
|
2,172
|
|
|
$
|
(892
|
)
|
|
$
|
(2,723
|
)
|
Net Income Tax Provision
|
$
|
5,272
|
|
|
$
|
3,545
|
|
|
$
|
2,203
|
|
|
2014
|
|
2013
|
|
2012
|
|||
Federal statutory income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
1.9
|
%
|
|
1.8
|
%
|
|
5.5
|
%
|
Tax return to provision true-up
|
(3.0
|
)%
|
|
(2.5
|
)%
|
|
(1.0
|
)%
|
Permanent differences:
|
|
|
|
|
|
|||
— change in derivative liability
|
0.0
|
%
|
|
0.0
|
%
|
|
16.1
|
%
|
— stock based compensation
|
1.3
|
%
|
|
0.8
|
%
|
|
0.3
|
%
|
— domestic production activities deduction
|
(1.8
|
)%
|
|
(2.7
|
)%
|
|
0.0
|
%
|
— credit for increasing research activities
|
(1.5
|
)%
|
|
(0.7
|
)%
|
|
0.0
|
%
|
— other
|
(0.5
|
)%
|
|
0.0
|
%
|
|
(0.4
|
)%
|
Change in valuation allowance
|
0.1
|
%
|
|
0.0
|
%
|
|
(39.5
|
)%
|
Net income tax provision
|
31.5
|
%
|
|
31.7
|
%
|
|
16.0
|
%
|
|
2014
|
|
2013
|
||||
Deferred tax assets:
|
|
|
|
||||
Federal, state, and foreign net operating loss carryovers
|
$
|
1,016
|
|
|
$
|
1,768
|
|
Stock option compensation
|
1,353
|
|
|
1,212
|
|
||
Accrued vacation, allowance for returns, bonuses & other
|
572
|
|
|
2,493
|
|
||
Gross deferred tax asset
|
$
|
2,941
|
|
|
$
|
5,473
|
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Patents and trademarks
|
(500
|
)
|
|
(536
|
)
|
||
Change in tax accounting methods
|
(198
|
)
|
|
(297
|
)
|
||
Property & equipment
|
(583
|
)
|
|
(824
|
)
|
||
Gross deferred tax liabilities
|
(1,281
|
)
|
|
(1,657
|
)
|
||
Less: valuation allowance
|
(217
|
)
|
|
(201
|
)
|
||
Deferred tax assets, net
|
$
|
1,443
|
|
|
$
|
3,615
|
|
Year ending June 30,
|
Amount
|
||
2015
|
$
|
2,320
|
|
2016
|
2,323
|
|
|
2017
|
2,320
|
|
|
2018
|
1,282
|
|
|
2019
|
1,246
|
|
|
Thereafter
|
6,395
|
|
|
Total future minimum lease payments
|
$
|
15,886
|
|
|
Fiscal Quarter
|
|
Year ended June 30, 2014
|
||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
|||||||||||
Revenue, net
|
$
|
51,328
|
|
|
$
|
51,538
|
|
|
$
|
55,064
|
|
|
$
|
56,038
|
|
|
$
|
213,968
|
|
Gross profit
|
43,519
|
|
|
43,594
|
|
|
46,605
|
|
|
47,056
|
|
|
180,774
|
|
|||||
Net income
|
$
|
3,256
|
|
|
$
|
3,282
|
|
|
$
|
2,494
|
|
|
$
|
2,351
|
|
|
$
|
11,383
|
|
Per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income per share, basic
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.11
|
|
Income per share diluted
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.10
|
|
|
Fiscal Quarter
|
|
Year ended June 30, 2013
|
||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
|||||||||||
Revenue, net
|
$
|
52,859
|
|
|
$
|
53,438
|
|
|
$
|
50,370
|
|
|
$
|
51,511
|
|
|
$
|
208,178
|
|
Gross profit
|
45,052
|
|
|
38,760
|
|
|
43,501
|
|
|
44,222
|
|
|
171,535
|
|
|||||
Net income (loss)
|
$
|
4,165
|
|
|
$
|
209
|
|
|
$
|
3,416
|
|
|
$
|
(182
|
)
|
|
$
|
7,608
|
|
Per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) per share, basic
|
$
|
0.04
|
|
|
$
|
0.00
|
|
|
$
|
0.03
|
|
|
$
|
0.00
|
|
|
$
|
0.07
|
|
Income (loss) per share, diluted
|
$
|
0.03
|
|
|
$
|
0.00
|
|
|
$
|
0.03
|
|
|
$
|
0.00
|
|
|
$
|
0.06
|
|
1
|
|
SECTION 1.
|
INTRODUCTION.
|
SECTION 2.
|
DEFINITIONS.
If a Participant’s Award Agreement (or other written agreement executed by and between Participant and the Company) expressly includes defined terms that expressly are different from and/or conflict with the defined terms contained in this Plan then the defined terms contained in the Award Agreement (or other written agreement executed by and between Participant and the Company) shall govern and shall supersede the definitions provided in this Plan.
|
2
|
|
(i)
|
is not on a leave of absence for any reason for ninety calendar days or more in the Fiscal Year;
|
(ii)
|
is not on any type of corrective action plan; and
|
(iii)
|
is not a participant in the Company’s FY2015 Sales Incentive Plan.
|
3
|
|
4
|
|
5
|
|
6
|
|
7
|
|
8
|
|
9
|
|
10
|
|
|
LIFEVANTAGE CORPORATION
___________________________
By:
Title:
|
11
|
|
12
|
|
1
|
|
•
|
Ensure alignment of expectations between the sales organization and individual Participants;
|
•
|
Focus on growth in enrollment and Company revenues;
|
•
|
Support reductions in distributor attrition; and
|
•
|
Ensure a pay for performance philosophy where a Participant is recognized and rewarded for achieving results.
|
2
|
|
3
|
|
(i)
|
is responsible for sales targets within the sales organization (must be an account manager or sales manager or above);
|
(ii)
|
is not on a leave of absence for any reason for thirty calendar days or more in a Quarter;
|
(iii)
|
is not on any type of corrective action plan; and
|
(iv)
|
is not a participant in the Company’s FY2015 Annual Incentive Plan.
|
Performance Metrics
|
|
Description
|
Revenue
|
|
Based on achievement of Company revenue goals for assigned geographic/territory/accounts
|
Enrollment
|
|
Based on achievement of enrollment goals for assigned geography/territory/accounts
|
Distributor Attrition Rate
|
|
Based on achievement of attrition rate goals assigned by management for assigned geography
|
4
|
|
Degree of Achievement
|
|
Potential Payment for Performance Metric
|
Less than guidance of Performance Expectation
|
|
None
|
|
|
|
Between Guidance and 90% and 100% of target of Performance Expectation
|
|
Proportionate scaling between 30% and 100% of Target Amount
|
|
|
|
Between 90% and 100% of Performance Expectation
|
|
Proportionate scaling between 50% and 100% of Target Amount
|
|
|
|
Above 100% of Performance Expectation
|
|
Proportionate scaling such that for each additional 1% achievement over Performance Expectation, potential payment increases by 4% of Target Amount
|
5
|
|
Participant Job Level
|
|
Annual Target Amount in Dollars
|
Senior Vice President or above
|
|
50% multiplied by Relative Weight multiplied by Base Salary
|
|
|
|
Vice President
|
|
35% multiplied by Relative Weight multiplied by Base Salary
|
|
|
|
Below Vice President
|
|
20% multiplied by Relative Weight multiplied by Base Salary
|
6
|
|
7
|
|
8
|
|
9
|
|
10
|
|
11
|
|
|
LIFEVANTAGE CORPORATION
___________________________
By:
Title:
|
12
|
|
1.
|
Services, Pricing and Payment
. The Services to be provided by IntegraCore to Client hereunder, along with the pricing and payment for services are set forth in the Statement of Work attached as Schedule A, attached hereto and incorporated and made a part of this Agreement by this reference. In the event of a conflict between the terms of this Agreement and Schedule A, the terms of this Agreement shall control.
|
a.
|
Except as expressly provided in the Statement of Work or otherwise in this Agreement, IntegraCore shall provide all equipment necessary to perform the Services in accordance with this Agreement and shall have the right to perform the Services in the manner and using the means IntegraCore deems necessary and appropriate in its sole discretion.
|
b.
|
In the event that any provision or term set forth in the Statement of Work contradicts any provision or term of the body of this Agreement, the provision or term set forth in the Statement of Work shall supersede and replace such contradictory provision or term.
|
c.
|
Client is solely responsible for all international fees and costs as set forth in the Statement of Work. Furthermore, Client is solely responsible for tax liabilities, duties, product identification, product valuation, and product registration for any and all international shipments.
|
2.
|
Term, Option and Renewal
. This Agreement shall run from the Effective Date to the last date of the month thirty six (36) months following the Effective Date. The term of this Agreement shall automatically renew month to month at the expiration of the 36 month term unless either Party gives prior written notice forty five (45) days before the expiration of the initial term or the renewal term.
|
3.
|
Offer Only; Effective Date
. Execution of this Agreement by Client shall constitute only an offer for services which shall not be binding unless signed and executed by only those individuals authorized to accept this Agreement on behalf of IntegraCore. IntegraCore’s sales and service representatives do not have the authority to bind IntegraCore to this Agreement. This Agreement becomes effective to bind both
|
4.
|
Confidentiality
. Both Parties acknowledge and agree to the Confidentiality and Non-Disclosure Agreement attached hereto as Exhibit B and will execute said document, if not already signed by both Parties, in conjunction with the execution of this Agreement. Said Exhibit is made incorporated herein as if fully set forth by this reference.
|
5.
|
Ownership of Intellectual Property; No License
. Each Party acknowledges that it may have access to certain intellectual property owned or licensed by the other Party in connection with this Agreement. Each of IntegraCore and Client agrees that no license or any other property right in any such intellectual property is granted to the other Party by the other as a result of this Agreement.
|
6.
|
Intentionally Omitted
.
|
7.
|
Events of Default
. The occurrence of any of the following shall constitute an event of default by either Client or IntegraCore (“Event of Default”) hereunder:
|
a.
|
The default in the prompt and complete payment or performance of any obligation of Client or IntegraCore now or hereinafter arising under this Agreement where such default is not cured within thirty (30) days after written notice thereof from the other Party.
|
b.
|
If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (a “Bankruptcy Law”), Client or IntegraCore shall (i) commence a voluntary case or proceeding; (ii) consent to the entry of an order for relief against it in an involuntary case; (iii) consent to the appointment of a trustee, receiver, assignee, liquidator or similar official; (iv) make an assignment for the benefit of its creditors; (v) admit in writing its inability to pay its debts as they become due, or (vi) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (a) is for relief against CLIENT or IntegraCore in an involuntary case; (b) appoints a trustee, receiver, assignee, liquidator or similar official; or (c) orders the liquidation, and in each case, the order or decree is not dismissed within sixty (60) days.
|
c.
|
The initiation of steps by any third party to obtain a lien, levy or writ of attachment or garnishment upon any or all of the Collateral or substantially all of any of the other property of Client or any guarantor of any Secured Obligation or to affect any of the Collateral or any such other property by other legal process not in the ordinary course of business by the Client, unless the same is dismissed within thirty (30) days after the initiation thereof.
|
d.
|
Should any representation or warranty by either Party be false.
|
e.
|
If either Party has a reasonable concern that the other Party may breach this Agreement, they may send a written statement setting forth the reasons for the concern of breach and make a demand for further assurances that the Party is or will continue to honor this Agreement. The Party in receipt of such request shall respond in writing to the requesting Party within twenty (20) calendar days of the written request or they shall be deemed to be in Default of this Agreement.
|
8.
|
Remedies Upon Default
. If any Event of Default occurs, IntegraCore or Client may exercise any one or more of all rights and remedies available to it under this Agreement, under applicable Utah law, at equity, or otherwise, including, without limitation:
|
a.
|
Termination of this Agreement
. The non-defaulting Party may terminate this Agreement by written notice to the defaulting Party, effective upon receipt of such notice.
|
b.
|
Collection
. The non-defaulting party may collect from the defaulting party all actual damages, sums, fees, costs, expenses and obligations due under this Agreement, including collection costs, pre and post judgment interest at the rate of 18% per annum, court costs (filing fees, service of process, and other court fees), and all reasonable attorney’s fees incurred by the non-defaulting party in connection with such Event of Default or the interpretation or enforcement of this Agreement or the rights and remedies of the non-defaulting party hereunder.
|
c.
|
Intentionally Omitted
.
|
d.
|
Intentionally Omitted
.
|
e.
|
Cumulative Remedies
. The rights and remedies of each Party in this section or in any other part of this Agreement are cumulative of themselves and of every other right or remedy.
|
9.
|
Abandoned Goods
. Notwithstanding the other terms of this Agreement, if at any time IntegraCore determines, in its reasonable discretion, that any goods in its possession or facility in connection with this Agreement have been abandoned by Client, IntegraCore may demand in a written notice to Client that Client, at its sole cost, remove or cause to be removed from any IntegraCore warehouse or storage facility such goods and that Client make payment of all fees, expenses and costs due; provided, however, IntegraCore shall have the right, but not the obligation, to refuse and stop any such removal, until Client makes payment of all charges, fees, expenses and costs due hereunder. If such payment is not so made and such goods are not so removed within sixty (60) calendar days of such written notice, this Agreement shall terminate as to such goods, and such goods shall then be, without any further notice to or action of Client, the sole property of IntegraCore. IntegraCore may then in its reasonable discretion move and store such goods at Client’s expense, and IntegraCore may retain all proceeds and benefits of any such action only to the extent that IntegraCore is owned monies or the goods have not been removed after written notice as set forth above. All remaining goods shall be promptly provided to Client. The rights and remedies of this section shall be cumulative of every other right or remedy.
|
10.
|
Early Termination
.
|
a.
|
Notwithstanding the other terms of this Agreement, IntegraCore may terminate this Agreement during the term or any renewal term of this Agreement, if Client is storing or shipping product in violation of law, including any city, municipality, county, state, foreign, international; or in violation of intellectual property rights of another (domestic or foreign); or if Client has failed to cure any default under this Agreement, including payment, after written notice of such default and a reasonable time to cure.
|
b.
|
Notwithstanding the other terms of this Agreement, Client may terminate this Agreement during the term or any renewal term of this Agreement, if IntegraCore fails to meet expected service
|
11.
|
Independent Contractor
. At all times IntegraCore shall be acting as an independent contractor and not as an employee, partner, joint venturer, or agent of Client. As an independent contractor, IntegraCore shall have no authority, express or implied, to commit or obligate Client in any manner whatsoever. IntegraCore shall be responsible for the payment of all federal, state or local income taxes payable with respect to all sums paid to IntegraCore under this Agreement.
|
12.
|
Representations and Warranties
.
|
a.
|
IntegraCore represents and warrants to Client that: (i) it is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Utah; (ii) it has the lawful right, power, authority and capacity to enter into this Agreement; (iii) the person signing this Agreement is authorized to do so; and (iv) neither the execution nor the performance of this Agreement shall constitute a violation of or interfere with IntegraCore's obligations to any third party.
|
b.
|
Client represents and warrants to IntegraCore that: (i) it is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Colorado; (ii) it has the lawful right, power, authority and capacity to enter into this Agreement; (iii) the person signing this Agreement is authorized by Client as an officer, director, or manager, or has such authority by a declaration to do so; and (iv) neither the execution nor the performance of this Agreement shall constitute a violation of or interfere with Client's obligations to any third party.
|
c.
|
None of the Parties makes any representation or warranty except those expressly set forth in this Agreement, attachments or exhibits hereto. Each Party disclaims all other warranties and conditions, express, implied or statutory, including without limitation the implied warranties of title, non-infringement, merchantability, and fitness for a particular purpose.
|
13.
|
Limitation of liability
. Notwithstanding any other provision in this Agreement (including Schedules and Exhibits), each Party's maximum liability to the other under this Agreement for any cause whatsoever, regardless of the form of action, whether in contract or in tort, including but not limited to negligence of the other Party and indemnification obligations, shall be limited to the recovery of actual damages. In addition, neither Party shall be liable to the other Party for lost profits or special, incidental or consequential damages, and punitive damages, whether based in contract or tort (including negligence, strict liability or otherwise), and whether or not advised of the possibility of such damages.
|
14.
|
Inventory Shrinkage; Insurance; Carrier Claims; and Shipping Errors
.
|
a.
|
Once IntegraCore has received Client’s inventory items into IntegraCore’s systems and physical warehouses in connection with this Agreement, IntegraCore will be responsible for any actual
|
b.
|
Client shall insure, at its own expense, its inventory against loss from flood, fire, theft, etc. just as it would if its inventory were in its own warehouse. IntegraCore shall, during the term here of, maintain in full force and effect the insurances listed below. IntegraCore shall provide a certificate of insurance evidencing the insurances listed below. The Commercial General Liability insurance will be endorsed to add Client as an Additional Insured as respects to Integracore’s obligations under this agreement.
|
i.
|
Commercial Liability insurance with respect to coverage for the property of others stored at its properties, with a limit not less than $5 Million per occurrence
|
ii.
|
Commercial General Liability insurance not less than $5 Million per occurrence
|
iii.
|
Business Automobile Liability insurance not less than $1 Million per occurrence
|
iv.
|
Workers Compensation insurance per State statute
|
c.
|
In the event a shipment or any part of it is received in damaged condition, Client shall work with the carrier or manufacturer/supplier to remedy damages. Where damages are not noted on the Bill of Lading, Client will work with IntegraCore to remedy said damages. Further, Client shall be responsible for filing a claim with the carrier if Client’s carrier account was used, and IntegraCore shall be responsible for filing a claim with the carrier if IntegraCore’s carrier account was used, after such claim is raised to IntegraCore and all required information has been provided by Client.
|
d.
|
Client shall be solely responsible to provide all shipping information and data for shipping product via portkey (or otherwise) to Client’s customers. IntegraCore shall not be responsible for any shipment, fees, taxes, fines, or costs whatsoever for shipments that contained inaccurate, incorrect, or misinformation provided by Client.
|
e.
|
If IntegraCore incorrectly ships product due to its own error, then IntegraCore shall pay the actual cost for any item and the pick pack and shipment for the re-shipment of any product at the same shipping method as the original shipment method at IntegraCore’s sole cost.
|
15.
|
Indemnification
.
|
a.
|
Subject to the limitations on liability found herein, IntegraCore shall indemnify, hold harmless and defend Client and each person or entity that is an officer, director, member, manager, employee, affiliate or agent of Client from and against any and all losses, claims, damages, liabilities, whether joint or several, expenses (including reasonable legal fees and expenses), judgments, fines and other amounts paid in settlement, incurred or suffered (collectively, “Losses”) by any such person or entity arising out of or in connection with: (i) the breach of any representation or warranty made by IntegraCore hereunder; (ii) the breach of any term or provision of this Agreement or (iii) any intentional or negligent act by IntegraCore or its employees or agents in connection with the performance by IntegraCore or its employees or agents hereunder, provided such negligent act or omission was not done or omitted at the direction of Client.
|
b.
|
Subject to the limitations on liability set forth herein, Client shall indemnify, hold harmless and defend IntegraCore and each person or entity that is an officer, director, employee, affiliate or agent of IntegraCore from and against any and all losses by any such person or entity arising out of or in connection with: (i) the inaccuracy or breach of any representation or warranty made by Client hereunder; (ii) the breach of any term or provision of this Agreement by Client; (iii) any negligent act or omission by Client or its employees or agents in connection with the performance by Client or its employees or agents hereunder, provided such negligent act or omission was not done or omitted at the direction of IntegraCore; (iv) for any and all claims brought under a theory of contract, statute or tort law against IntegraCore regarding the manufacturing, instructions, warnings, contents, or use of Client’s product ; (v) any claim against IntegraCore alleging violation of intellectual property rights, including patent infringement, trademark, trade dress, trade secrets, and copyright for any product or agreed to use of information provided by Client to IntegraCore under this Agreement; and (vi) any unpaid transportation charges in connection with Products Client caused to be shipped to or from IntegraCore for fulfillment. This provision shall survive and termination or cancelation of this Agreement.
|
16.
|
Audit Rights
. IntegraCore shall keep for at least four (4) years from the date of distribution proper records and books of accounting relating to the Services provided to Client. Once every six (6) months, Client or its designee may inspect such records to verify such reports. If the audit finds material discrepancies between the books and records and the audited results, the Parties agree the frequency of the audits may be increased to the extent reasonably necessary to satisfy the purposes of this Agreement. Any such inspection will be conducted at the sole expense of Client and shall be in a manner that does not unreasonably interfere with IntegraCore's business operations. This provision shall not survive the termination of this Agreement.
|
17.
|
Shortages/Nonconforming Goods
. Claims for shortages that are not attributable to a carrier, or for nonconforming goods, are to be reported in writing to IntegraCore's customer care department within ten (10) days after receipt of shipment, otherwise the claim will not be allowed and Client shall be deemed to have waived such claim.
|
18.
|
Sale and Use Taxes
. Client agrees to pay, when due, any and all applicable sales and use taxes on any products or Services sold to Client by IntegraCore. Client agrees to indemnify and hold IntegraCore harmless for any and all applicable sales and use taxes that remain unpaid when due on any products or Services sold to a customer of Client by IntegraCore. This provision shall survive and termination or cancelation of this Agreement.
|
19.
|
Subcontractors
. IntegraCore may, in its reasonable discretion, subcontract certain individuals to assist in the performance of all or any part of the work ordered by Client or to otherwise be performed by IntegraCore hereunder. The use of a subcontractor by IntegraCore shall not create any contractual relationship or obligations between any subcontractor and Client.
|
20.
|
Non-Solicitation Clause
. Client agrees and acknowledges that IntegraCore has invested significant time and money into the development of its employees and into each of its employee’s training, understanding and skill. Thus, Client agrees that it shall not directly solicit, make offers of employment, or hire employees of IntegraCore, during the term of this Agreement, without the prior written consent of IntegraCore, which shall be granted or withheld in IntegraCore’s sole discretion. This convent shall not apply to employees of IntegraCore who directly respond to Client’s advertisement for a position or the advertisement of an agent of Client. Client further acknowledges that any breach of this Section may cause IntegraCore irreparable harm for which no adequate remedy exists at law, and agrees that upon any such breach of this Section, IntegraCore shall be entitled to seek injunctive relief, without any requirement to post a bond, and without prejudice to any other right or remedy that IntegraCore may have in law or equity.
|
21.
|
Miscellaneous
.
|
a.
|
Notices
. All notices, consents, requests, instructions, approvals or other communications provided for herein shall be in writing and shall be delivered by personal delivery, overnight courier, U.S. certified mail addressed, or facsimile to the receiving Party at the address or facsimile number set forth below. Any Party may change the address set forth below by notice to each other Party given as provided herein. All such communications and all time periods based on such communications shall be effective when received.
|
LIFEVANTAGE CORPORATION
Attn: Robert Urban
9785 S Monroe Street, Suite 300
Sandy, Utah 84070
Office: 801-432-9000
|
INTEGRACORE, LLC:
Attn: Kurt Flygare
6077 W. Wells Park Rd.
West Jordan, Utah 84081
Office: 801-994-3921
Facsimile: 801-838-8890
|
b.
|
No Waiver
. No failure to exercise, delays in exercising, or single or partial exercise of any right, power or remedy by any Party shall constitute a waiver thereof. No provision of this Agreement shall be deemed waived unless such waiver shall be in writing signed by the waving Party. No waiver by any Party of any of its rights or remedies on any one occasion shall operate as a waiver of any other of its rights or remedies or any of its rights or remedies on a future occasion.
|
c.
|
Entire Agreement
. This Agreement, including its schedules and exhibits, constitutes the entire Agreement of the Parties with respect to the subject matter hereof and shall supersede all other representations, statements, Agreements, written or oral, between the Parties unless reduced to writing and made a part of this Agreement.
Client acknowledges and agrees that Client is not relying upon any other agreements, understandings, inducements, promises, representations or warranties, express or implied made by any sales person, employee or agent of the IntegraCore unless reduced to writing and made a part of this Agreement.
|
d.
|
Interpretation
. Headings in this Agreement are included for reference purposes only and shall not affect the meaning of any provisions of this Agreement. Client (and/or Client’s counsel) has reviewed this Agreement and Client agrees that any rule of contract interpretation that ambiguities or uncertainties are to be interpreted against the drafting party or the party who
|
e.
|
Assignment
. Neither Party shall assign or transfer this Agreement, or any right or obligation hereunder, without the prior written consent of the other Party. For purposes of this paragraph, the term “assign or transfer” shall include any merger, sale of stock or other change in control of Client that results in a change in equity ownership of the Party of fifty percent (50%) or more.
|
f.
|
Amendment
. This Agreement shall not be amended or modified except by written document signed by all of the Parties.
|
g.
|
Survival
. The obligations arising under Sections 4, 5, 8, 9, 11, 13, and 15 of this Agreement shall survive any expiration or termination of this Agreement.
|
h.
|
Governing Law; Jurisdiction
. This Agreement shall be governed by and construed in accordance with the laws of the State of Utah without regard to conflicts-of-laws principles that would require the application of any other law. Each of the Parties hereto irrevocably submits to the jurisdiction of each federal or state court located in Salt Lake County, Utah and waives any objection it may now or hereafter have to venue or to convenience of forum.
|
i.
|
Attorney’s Fees and Other Expenses
. Each Party shall pay all reasonable costs and expenses incurred by or on behalf of the other Party in connection with the other Party’s exercise of any or all of its rights and remedies under this Agreement, including, without limitation, reasonable attorneys’ fees.
|
j.
|
Binding
. This Agreement shall be binding on the Parties and their respective heirs, successors and assigns.
|
k.
|
Severability
. In the event that any provision of this Agreement is held invalid, illegal or unenforceable by any court of competent jurisdiction, such portion shall be deemed severed from this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect as fully as though such invalid, illegal, or unenforceable portion had never been part of this Agreement.
|
l.
|
Force Majeure
. Neither Party shall be liable to the other for any delay or failure of performance hereunder where the delay or failure is caused by strikes, lockouts, war, riots, insurrection, civil commotion, failure of supplies from ordinary sources, fire, flood, storm, accident, any act of God, or any other cause beyond the control of the Party. The Party claiming the benefit of this provision shall use their best efforts to remove any such causes and to resume performance under this Agreement as soon as is feasible. Performance by the other Party shall be suspended and excused during any such delay or failure.
|
m.
|
Cooperation
. Each Party agrees to execute and deliver such further documents and to cooperate as may be necessary to implement and give effect to the provisions contained herein.
|
n.
|
Counterparts
. This Agreement may be signed in counterparts and by signature sent by facsimile, each of which shall be deemed to be an original, and all of which together shall constitute one and the same Agreement.
|
Pricing
|
Order Type
|
|
|
Measurement
|
Mass Mail Order
|
Standard Order
|
|
Per order
|
[***]
|
[***]
|
|
Per line
|
[***]
|
[***]
|
|
Per unit
|
[***]
|
[***]
|
|
International Fee
|
[***]
|
[***]
|
|
Packaging Fill per Order
|
[***]
|
[***]
|
|
A.
|
Storage pricing
|
a.
|
[***] per month for pallet locations (to be prorated and billed on a weekly basis)
|
b.
|
[***] per month for pick locations (to be prorated and billed on a weekly basis)
|
B.
|
Will Call Orders / International Bulk Orders
|
a.
|
Will call orders Standard Pick Pack Fees Apply
|
C.
|
Placing Bar-code on to finished goods [***] Each
|
D.
|
Container Unload Floor stack*
|
a.
|
53’ Container [***] Each
|
b.
|
40’ Container [***] Each
|
c.
|
20’ Container [***] Each
*Container unload fee does not include the receiving charges for all products received. As such, an additional receiving fee will also be assessed. Does not include pallets required for put away. |
E.
|
Implementation Setup Fee (One Time) [***]
|
F.
|
Kitting & Assembly As Quoted/Minimum of [***]
|
G.
|
Receiving Requirements Refer to IntegraCore routing guide
|
a.
|
Pallet/new license receipt [***] Each
|
b.
|
Labor to correct other nonconformance issues (labeling, pallet quality, re-boxing, sorting through mixed pallets, down stacking, re-palletizing for non-standard pallets and pallets out of dimensional specification (48X40X52), etc.) [***] per Hour
|
c.
|
Supplied Pallet [***] per pallet
|
H.
|
IT Custom Development [***] per Hour
|
I.
|
IT Re-implementation [***] Charge
|
J.
|
Account Management Fee [***] Per Month
|
K.
|
3
rd
Party Billing Fee [***] Per Order
|
L.
|
Returns Processing [***] Per Order
|
M.
|
White Glove Fee
|
a.
|
2-4 Business Hours Notice [***] Per Order
|
b.
|
4-6 Business Hours Notice [***] Per Order
|
c.
|
If freight orders need to be rushed out in less than two business days, this will be priced at time of request if approved by Account manager. Rush freight orders must be approved by Account Manager before guaranteeing service.
|
N.
|
Delivery Services
|
a.
|
Per Delivery-Small Van(small pallet of product) – Salt Lake Valley [***]
|
b.
|
Per Delivery-Large Truck(2 to 12 pallets) – Salt Lake Valley [***]
|
c.
|
Per Delivery –Small Van(small pallet) – Davis or Utah County [***]
|
d.
|
Per Delivery-Large Truck(2 to 12 pallets) – Davis or Utah County [***]
|
O.
|
Physical inventory counts
|
a.
|
Integracore shall provide free of charge: count sheets, Account Manager/CSR time, update of inventory adjustments after count is complete
|
b.
|
[***] per hour for Integracore employees helping during the PI count
|
c.
|
If the PI requires extra Integracore lifts above one lift these will be billed for these at a rate of [***] per day.
|
d.
|
If scissor lifts need to be rented from an outside company the charge is [***] per day per lift (This will commonly be charged for Quarter end and Year end counts and includes rental, pick-up, and delivery fees)
|
P.
|
Hong Kong Rate Table:
|
Basic Services
|
Rates (USD)
|
|
Storage & Inventory Management
•
Goods stored under ambient environment
|
[***] per CBM per day
|
|
Goods Receiving, Sorting & Handling (excluding materials)
|
[***] per CBM plus [***] per SKU
(Min. [***] per order)
|
|
Order Administration & Processing *(excluding materials)
Payment Collection if applicable – Cash Collection [***] on collection amount (minimum [***] per order)
|
•
[***] per order; plus [***] per unit
•
Will Call Handling(Order input before visit) [***] per order plus [***] per unit
•
Will Call Handling(Order input at V-Logic) [***] per order plus [***] per unit
•
Will Call Handling Admin - [***] per month
|
|
Local Hong Kong Pick Up & Delivery to Commercial or Residential Address
*
Delivery to commercial address (includes hospitals), street retail outlets, distributors and wholesalers between V-Logic and the collection/ delivery point in any land bound locations in Hong Kong (non-central warehouse)
*
Delivery to residential address between V-Logic and the collection/ delivery point in any land bound locations in Hong Kong
|
1 kg
|
[***]
|
2 kg
|
[***]
|
|
3 kg
|
[***]
|
|
4 kg
|
[***]
|
|
5 kg
|
[***]
|
|
6 kg
|
[***]
|
|
7 kg
|
[***]
|
Remarks:
*
Delivery to counter/ warehouses at department stores (e.g. Sogo, City Super, Seibu, and Wing On, etc.) is subject to a minimum of US [***] per order
*
Delivery to central warehouses of department store/ chain stores (e.g. Mannings, etc.), freight forwarder warehouses, airports or ocean ports is subject to a minimum of US [***] per order
*
Service fee exclude materials (such as pallets, packing carton boxes, etc.)
|
8 kg
|
[***]
|
9 kg
|
[***]
|
|
10 kg
|
[***]
|
|
11 kg
|
[***]
|
|
12 kg
|
[***]
|
|
13 kg
|
[***]
|
|
14 kg
|
[***]
|
|
15 kg
|
[***]
|
|
16 kg
|
[***]
|
|
17 kg
|
[***]
|
|
18 kg
|
[***]
|
|
19 kg
|
[***]
|
|
20 kg
|
[***]
|
|
21 kg
|
[***]
|
|
22 kg
|
[***]
|
|
23 kg
|
[***]
|
|
24 kg
|
[***]
|
|
25 kg
|
[***]
|
|
Over 25 kg
|
[***] + [***] per kg for weight over 25kg
|
Return Order Handling
|
•
[***] per order up to 3 units
•
Additional Units will be [***] per unit
|
A.
|
Account Management. You will be assigned a dedicated Account Manager.
|
a.
|
Personal account management
|
b.
|
Project management
|
c.
|
Quarterly cycle count and real time reporting
|
d.
|
Unlimited PortKey access for downloadable reports and order entry
|
e.
|
Quarterly Business Review (QBR) will be scheduled by your Account Manager to ensure expectations and needs are being met.
|
B.
|
Receiving
|
a.
|
Dock to stock (on time)- >=4 and <8 business hours
|
b.
|
All conforming receipts will be received into IntegraCore ‘s system within 1 business day of delivery
|
C.
|
Inventory
|
a.
|
Overall Inventory unit accuracy- >99.70%
|
b.
|
Cycle count- one complete count of all items per quarter
|
c.
|
Location audit- one complete audit per quarter
|
i.
|
Three business day notice required prior to inventory inspection
|
d.
|
Physical inventory counts are the responsibility of the client, not IntegraCore. These are to be arranged through the Account Manager
|
e.
|
Once IntegraCore has received Client’s inventory items into IntegraCore’s systems and physical warehouses, in connection with this Agreement, IntegraCore will be responsible for any damage to the goods in its possession once the receipt has been transacted. For those damaged items, IntegraCore shall issue a credit memo to the client for the actual manufacturing cost x item quantity damaged.
|
f.
|
An item shall be deemed as lost if the quantity in IntegraCore’s system is lower than what is physically in the location for that license plate. All lost items/quantities shall be transacted to a “Lost Hold” location and shall remain on lost hold until the item is found or until the end of the calendar month the item was put on Lost Hold, but no item shall be held one month to the next in the Lost Hold location. All items still on Lost Hold at month end shall be issued out of IntegraCore’s system in the following manner:
|
i.
|
All A items (outlined below) remaining on Lost Hold at month end, IntegraCore may write off 2.5% or below that specific license plates quantity.
|
ii.
|
B and C items (outlined below) remaining of Lost Hold at month end, IntegraCore may write off 5% of that specific item’s license plates quantity.
|
D.
|
Production
|
a.
|
Assembly on time based on delivery date as long as all inventory is available when Production PO is issued with 5-business day notice- 99.80%
|
E.
|
Shipping Quality (On Time)
|
a.
|
Express Orders (11 AM Mountain Time cutoff, same day)- 100%
|
b.
|
Standard Orders (8 AM Mountain Time cutoff, same day)- >99.80%
|
F.
|
Shipping Quality
|
a.
|
Small Parcel Orders Accuracy Percentage - >99.70%
|
b.
|
Bulk/Freight Orders Accuracy Percentage –
|
i.
|
A items – 99.7%
|
ii.
|
B/C items – 97%
|
G.
|
Bulk Orders
|
a.
|
Order Turnaround Time – 2 to 4 business days (depending on size of order, and based on monthly forecast provided by Client)
|
Open Account Agreement:
|
All accounts, including pre-pay and COD, must have a current completed and signed IntegraCore Open Account Agreement on file.
|
Sales Tax Forms:
|
Client must provide all necessary Sale Tax Exempt forms, including additional forms as may be requested by IntegraCore.
|
Credit Terms:
|
On approval of credit, initial payment terms are:
•
Net 15 Days – Assembly and procurement.
•
All shipping charges Net 7 Days—pick, pack, shipping, receiving etc…
|
Freight:
|
Unless otherwise stated, all prices reflect F.O.B. Salt Lake City, UT and/or Atlanta, GA. Freight is prepaid and added to invoice.
|
Specifications:
|
Prices in this statement of work may be revised if actual job specifications or instructions differ from those received for the purposes of this statement of work.
|
IntegraCore, LLC.,
a Utah limited liability company
By: /s/ Kurt Flygare
Its: President
Date (“Effective Date”): 5/30/2014
|
LifeVantage Corp
By: /s/ Douglas C. Robinson
Its: President and CEO
Date: 5/28/2014
|
1.
|
Confidential Information
. As used herein, the term “
Confidential Information
” shall mean:
|
(i)
|
any information disclosed by Discloser or its Affiliates, or its or their directors, officers, agents and representatives relating to Discloser or its Affiliates, including any clinical or preclinical data, tangible and intangible information relating to chemical and biological materials, cell lines, samples of assay components, media and/or cell lines and procedures and formulations for producing any such assay components, media and/or cell lines, know-how, trade secrets, plans, business strategy, patent rights, licenses, suppliers, designs, processes, formulas, manufacturing techniques, discoveries, inventions and ideas, improvements, developments, product specifications, machinery, drawings, photographs, equipment, devices, tools and apparatus, sales and marketing data and plans, pricing and cost information, distributor, customer, manager, staff and supplier information and any other technical or business information. "
Affiliates
" shall mean with respect to Discloser or Recipient, any subsidiaries or holding companies or the subsidiaries of any such holding companies;
|
(ii)
|
analyses, compilations, studies, reports and other documents prepared by Recipient to the extent that they contain or reflect the information specified in paragraph (i) above;
|
(iii)
|
the Subject Matter and the existence and contents of this Agreement.
|
|
1
|
|
|
If disclosed in written, graphic or physical form, Discloser shall use reasonable efforts to label such Confidential Information as confidential or proprietary information of Discloser, or if disclosed orally, Discloser shall use reasonable efforts to identify such Confidential Information as confidential at the time of disclosure.
|
2.
|
No License; No Further Agreement
. Each party retains all right, title and interest in and to its Confidential Information. The execution of this Agreement or the disclosure of Confidential Information hereunder shall not be deemed to constitute or imply any license or right to use or practice the same except as expressly provided herein, whether or not such Confidential Information is patented or patentable, nor as an obligation to enter into any further agreement relating to any of the Confidential Information or the Subject Matter.
|
3.
|
Confidentiality & Non-Use Obligations
. For a period of five (5) years from the date of disclosure (the “
Confidentiality Period
”), Recipient shall hold secret and confidential any and all Confidential Information received by it hereunder and (i) shall use Confidential Information exclusively for the Purpose and not otherwise, (ii) shall not, without the prior written consent of Discloser, disclose such Confidential Information to anyone, except pursuant to
Section 4
below, (iii) shall not use Confidential Information of Discloser for its own benefit (other than for the Purpose) or the benefit of any third party, including, without limitation, with respect to research, product development or patent filings, (iv) shall protect the confidentiality of the Confidential Information of Discloser using at least the same level of efforts and measures used to protect its own confidential information, and not less than commercially reasonable and customary efforts and measures; (v) shall not copy, reproduce or duplicate the other Party’s Confidential Information except to the extent required for the Purpose, or as otherwise provided herein; and (vi) shall notify Discloser as promptly as practicable of any unauthorized use, disclosure or loss of the Confidential Information of Discloser. During the Confidentiality Period and thereafter, Recipient shall not use the Confidential Information for any purpose except in connection with the Purpose, or as otherwise specified in a separate instrument executed by the parties hereto.
|
4.
|
Limitations on Disclosure
. Recipient shall limit disclosure of Discloser’s Confidential Information to its directors, officers, employees, consultants, agents and advisers and that of its Affiliates (each, a "
Recipient Related Party
") as necessary for the Purpose, who are informed of the confidential nature of Discloser’s Confidential Information and the other restrictions contained herein. Recipient shall ensure that each such Recipient Related Party is obliged (whether by its contract of employment or service of other contract or by law) to comply with such restrictions and obligations and shall
|
|
2
|
|
5.
|
Exceptions to Confidentiality Obligations
. Recipient’s obligations shall not apply to Confidential Information which
|
(a)
|
was already known to Recipient prior to disclosure hereunder, as evidenced by Recipient’s competent records, other than as a result of prior confidential disclosure by Discloser;
|
(b)
|
was in the public domain at the time of disclosure, or subsequently enters the public domain without violation by Recipient of its obligations hereunder;
|
(c)
|
is rightfully received by Recipient from third parties who have no obligations of confidentiality to Discloser; or
|
(d)
|
is independently developed by Recipient without use of or reliance on the Confidential Information, as evidenced by Recipient’s contemporaneous tangible records.
|
6.
|
Injunctive Relief/Specific Performance
. The parties hereto acknowledge and agree that the extent of damages to Discloser in the event of a material breach by Recipient of this Agreement would be difficult or impossible to ascertain and that there is and will be available to Discloser no adequate remedy at law in the event of such a material breach. Consequently, the Recipient agrees that in the event of such a material breach or threatened breach, Discloser shall be entitled, in addition to any other remedies (including damages), to request the specific performance of any or all of the covenants contained in this Agreement by an injunction or other equitable relief.
|
7.
|
Fax or Email Signatures.
In the event the parties execute this Agreement by exchange of faxed signed copies or emailed digital scans of signed copies, the parties agree that, upon being signed by both parties, this Agreement shall become effective and binding and that such faxed or emailed signed copies will constitute evidence of the existence of this Agreement.
|
8.
|
Governing Law; Assignment; Amendment
. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah, United States of America
and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement may not be assigned by either party without the prior written consent of the other party. Any such purported assignment shall be void. This Agreement is the complete agreement between the parties as of the Effective Date, as to the matters described herein and supersedes all prior discussions, correspondence, negotiations or agreements, written or oral as to such matters. No modification, amendment or waiver or any provision of this Agreement shall be effective unless in writing, specifically referring hereto and signed by both parties.
|
|
3
|
|
9.
|
Notice.
Any notice or other communication to be given under this Agreement shall be delivered personally, sent by international 2-day courier, or facsimile transmission (followed by a copy by international 2-day courier). All such notices or other communications shall be deemed to have been delivered at the time of such delivery if received prior to 5 p.m. on a business day at the recipient address and, if other than prior to 5 p.m. on a business day at the recipient address, on the next business day.
|
LifeVantage:
|
LifeVantage
At the address set forth at the beginning of the Agreement.
Attention:
General Counsel
|
IntegraCore:
|
IntegraCore, LLC
At the address set forth at the beginning of the Agreement.
|
10.
|
Term and Termination
.
The term of this Agreement shall be one (1) year from the Effective Date; provided, that the parties may extend the term by mutual written agreement. Notwithstanding the foregoing, either party may terminate this Agreement by giving thirty (30) days’ written notice to the other party or upon the material breach of this Agreement by the other party, which material breach continues unremedied for thirty (30) days after delivery to the breaching party by the nonbreaching party of notice of the material breach. The rights and obligations of confidentiality and limited use of this Agreement shall survive and continue for the duration of the Confidentiality Period, after any expiration or termination of this Agreement.
|
11
.
|
No Other Obligations
. Neither this Agreement nor the disclosure or receipt of Confidential Information hereunder shall constitute or imply any promise or intention by one party to make any purchase of products or services from the other party or enter into any other agreement(s) with the other party. A subsequent business relationship regarding the Subject Matter, if any, shall be governed by the terms of a separate agreement.
|
12.
|
Jurisdiction
. The parties will submit any dispute or claim arising under this Agreement to the exclusive jurisdiction of the state and federal Courts sitting in the County and State of Salt Lake, Utah, and the parties hereby submit to, and waive any objection to, personal jurisdiction and venue in such courts for such purpose.
|
|
4
|
|
LifeVantage Corporation
|
IntegraCore, LLC
|
By: /s/ Mike Gallman
|
By: /s/ Kurt Flygare
|
Name: Mike Gallman
|
Name: Kirt Flygare
|
Title: Director of Supply Chain
|
Title: President
|
|
5
|
|
If to Company:
|
With a copy to:
|
LifeVantage Corporation
9815 S. Monroe Street
Sandy, Utah 84970
Attention: General Counsel
Telephone:
Facsimile:
|
Kirt Shuldberg
Sheppard, Mullin, Richter & Hampton LLP 12775 El Camino Real San Diego, CA 92130 Telephone: (858) 720-8900 Facsimile: (858) 509-3691 |
If to Manufacturer:
|
With copy to:
|
Wasatch Product Development, LLC
12248 S. Lone Peak Parkway, Suite 106, Draper, Utah 84020
Attn: Kevin Casey, President
|
|
LIFEVANTAGE CORPORATION
By: /s/ Douglas C. Robinson
Name:
Douglas C. Robinson
Title:
President and CEO
|
WASATCH PRODUCT DEVELOPMENT, LLC
By: /s/ Kevin Casey Name: Kevin Casey Title: President |
Name
|
|
State or Country of Incorporation
|
LifeLine Nutraceuticals Corporation
|
|
Colorado
|
LifeVantage Asia Pte. Ltd.
|
|
Singapore
|
LifeVantage Japan KK
|
|
Japan
|
LifeVantage Australia Pty. Ltd.
|
|
Australia
|
LifeVantage Hong Kong Limited
|
|
Hong Kong
|
Importadora LifeVantage S. de R.L. de C.V.
|
|
Mexico
|
LifeVantage de Mexico S. de R.L. de C.V.
|
|
Mexico
|
Servicios Administrativos para la importacion de Productos Body & Skin, S.C.
|
|
Mexico
|
LifeVantage Canada Ltd.
|
|
Canada
|
LifeVantage Commission Services Limited
|
|
Hong Kong
|
LifeVantage Philippines Corporation
|
|
Philippines
|
LifeVantage Singapore Pte. Ltd.
|
|
Singapore
|
LifeVantage (Thailand) Company Limited
|
|
Thailand
|
1.
|
I have reviewed this Annual Report on Form 10-K of LifeVantage Corporation;
|
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(s) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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.
|
September 10, 2014
|
/s/ Douglas C. Robinson
|
|
Douglas C. Robinson
|
|
President & Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of LifeVantage Corporation;
|
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(s) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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.
|
September 10, 2014
|
/s/ David S. Colbert
|
|
David S. Colbert
Chief Financial Officer
(Principal Financial Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: September 10, 2014
|
/s/ Douglas C. Robinson
|
|
Douglas C. Robinson
President & Chief Executive Officer
(Principal Executive Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: September 10, 2014
|
/s/ David S. Colbert
|
|
David S. Colbert
Chief Financial Officer
(Principal Financial Officer)
|