2019 Q2 Form 10-Q Financial Statement

#000084914619000042 Filed on May 01, 2019

View on sec.gov

Income Statement

Concept 2019 Q2 2019 Q1 2018 Q4
Revenue $56.17M $56.01M $58.17M
YoY Change 3.95% 10.78% 17.55%
Cost Of Revenue $9.710M $9.270M $9.794M
YoY Change 20.32% 3.91% 7.43%
Gross Profit $46.46M $46.74M $48.37M
YoY Change 1.08% 12.25% 19.84%
Gross Profit Margin 82.71% 83.45% 83.16%
Selling, General & Admin $40.79M $17.30M $19.62M
YoY Change -2.09% 15.13% 33.96%
% of Gross Profit 87.8% 37.0% 40.55%
Research & Development $100.0K $500.0K
YoY Change -66.67% 66.67%
% of Gross Profit 0.21% 1.03%
Depreciation & Amortization $540.0K $480.0K $440.0K
YoY Change 38.46% 77.78% 37.5%
% of Gross Profit 1.16% 1.03% 0.91%
Operating Expenses $40.79M $44.50M $47.79M
YoY Change -2.09% 13.11% 25.64%
Operating Profit $5.670M $2.241M $581.0K
YoY Change 31.8% -2.48% -75.03%
Interest Expense -$360.0K $72.00K $100.0K
YoY Change 300.0% -21.74% -2.91%
% of Operating Profit -6.35% 3.21% 17.21%
Other Income/Expense, Net $190.0K -$83.00K -$172.0K
YoY Change -190.48% 27.69% -36.76%
Pretax Income $5.500M $2.158M $409.0K
YoY Change 37.5% -3.36% -80.1%
Income Tax $1.590M $376.0K -$420.0K
% Of Pretax Income 28.91% 17.42% -102.69%
Net Earnings $3.907M $1.782M $829.0K
YoY Change 30.58% 8.99% 161.51%
Net Earnings / Revenue 6.96% 3.18% 1.43%
Basic Earnings Per Share $0.27 $0.13 $0.06
Diluted Earnings Per Share $0.26 $0.12 $0.06
COMMON SHARES
Basic Shares Outstanding 14.34M shares 14.17M shares 13.94M shares
Diluted Shares Outstanding 15.29M shares 14.96M shares

Balance Sheet

Concept 2019 Q2 2019 Q1 2018 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $18.82M $15.91M $18.99M
YoY Change 13.03% 14.05% 48.48%
Cash & Equivalents $18.82M $15.91M $18.99M
Short-Term Investments
Other Short-Term Assets $7.310M $7.640M $6.130M
YoY Change 19.06% -2.68% 51.36%
Inventory $13.75M $14.49M $13.30M
Prepaid Expenses
Receivables $2.066M $1.916M $2.376M
Other Receivables $1.230M $2.710M $2.860M
Total Short-Term Assets $43.19M $42.68M $43.66M
YoY Change 10.91% 8.79% 23.7%
LONG-TERM ASSETS
Property, Plant & Equipment $7.131M $6.818M $5.848M
YoY Change 8.26% 20.46% 25.93%
Goodwill
YoY Change
Intangibles $983.0K $1.016M $1.049M
YoY Change -11.84% -11.5% -11.18%
Long-Term Investments
YoY Change
Other Assets $1.278M $1.245M $1.255M
YoY Change 2.49% -4.16% 9.89%
Total Long-Term Assets $12.09M $11.43M $10.44M
YoY Change -0.98% -2.32% 0.69%
TOTAL ASSETS
Total Short-Term Assets $43.19M $42.68M $43.66M
Total Long-Term Assets $12.09M $11.43M $10.44M
Total Assets $55.27M $54.11M $54.09M
YoY Change 8.08% 6.24% 18.48%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $5.180M $5.065M $4.108M
YoY Change 35.85% 9.42% 25.67%
Accrued Expenses $11.05M $20.29M $22.49M
YoY Change 6.21% 6.85% 31.91%
Deferred Revenue $998.0K
YoY Change -9.85%
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $1.454M $1.939M $2.000M
YoY Change -27.3% -3.05% 0.0%
Total Short-Term Liabilities $26.20M $27.48M $28.76M
YoY Change 10.04% 6.96% 26.55%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00 $2.427M
YoY Change -100.0% -100.0% -45.55%
Other Long-Term Liabilities $1.879M $1.881M $1.885M
YoY Change -5.01% -4.61% -4.12%
Total Long-Term Liabilities $1.879M $1.881M $4.312M
YoY Change -65.14% -68.32% -32.87%
TOTAL LIABILITIES
Total Short-Term Liabilities $26.20M $27.48M $28.76M
Total Long-Term Liabilities $1.879M $1.881M $4.312M
Total Liabilities $28.07M $29.36M $33.08M
YoY Change -3.84% -7.17% 13.46%
SHAREHOLDERS EQUITY
Retained Earnings -$99.96M -$100.9M -$102.5M
YoY Change -2.7% -3.63% -3.41%
Common Stock $127.1M $125.7M $123.5M
YoY Change 1.95% 1.4% 0.7%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $27.20M $24.75M $21.02M
YoY Change
Total Liabilities & Shareholders Equity $55.27M $54.11M $54.09M
YoY Change 8.08% 6.24% 18.48%

Cashflow Statement

Concept 2019 Q2 2019 Q1 2018 Q4
OPERATING ACTIVITIES
Net Income $3.907M $1.782M $829.0K
YoY Change 30.58% 8.99% 161.51%
Depreciation, Depletion And Amortization $540.0K $480.0K $440.0K
YoY Change 38.46% 77.78% 37.5%
Cash From Operating Activities $6.980M $3.870M $4.570M
YoY Change 27.61% 24.44% 109.63%
INVESTING ACTIVITIES
Capital Expenditures -$820.0K -$1.420M -$180.0K
YoY Change -35.94% 13.6% -80.85%
Acquisitions
YoY Change
Other Investing Activities $0.00 $0.00 -$600.0K
YoY Change
Cash From Investing Activities -$820.0K -$1.420M -$780.0K
YoY Change -35.94% 13.6% -17.02%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -3.310M -5.490M -1.990M
YoY Change 116.34% 662.5% 165.33%
NET CHANGE
Cash From Operating Activities 6.980M 3.870M 4.570M
Cash From Investing Activities -820.0K -1.420M -780.0K
Cash From Financing Activities -3.310M -5.490M -1.990M
Net Change In Cash 2.850M -3.040M 1.800M
YoY Change 7.14% -366.67% 267.35%
FREE CASH FLOW
Cash From Operating Activities $6.980M $3.870M $4.570M
Capital Expenditures -$820.0K -$1.420M -$180.0K
Free Cash Flow $7.800M $5.290M $4.750M
YoY Change 15.56% 21.33% 52.24%

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WeightedAverageNumberOfDilutedSharesOutstanding
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CY2019Q1 us-gaap Weighted Average Number Of Shares Outstanding Basic
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us-gaap Weighted Average Number Of Shares Outstanding Basic
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us-gaap Concentration Risk Credit Risk
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Concentration of Credit Risk</font></div><div style="line-height:120%;padding-bottom:10px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Accounting guidance for financial instruments requires disclosure of significant concentrations of credit risk regardless of the degree of such risk. Financial instruments with significant credit risk include cash and investments.</font></div></div>
us-gaap Loss Contingency Disclosures
LossContingencyDisclosures
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;padding-top:10px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Commitments and Contingencies</font></div><div style="line-height:120%;padding-bottom:10px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Contingencies</font></div><div style="line-height:120%;padding-bottom:10px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company accounts for contingent liabilities in accordance with Accounting Standards Codification ("ASC") Topic 450, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Contingencies</font><font style="font-family:inherit;font-size:10pt;">. This guidance requires management to assess potential contingent liabilities that may exist as of the date of the financial statements to determine the probability and amount of loss that may have occurred, which inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company&#8217;s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. For loss contingencies considered remote, no accrual or disclosures are generally made. Management has assessed potential contingent liabilities as of </font><font style="font-family:inherit;font-size:10pt;">March&#160;31, 2019</font><font style="font-family:inherit;font-size:10pt;">, and based on the assessment, there are no probable loss contingencies requiring accrual or disclosures within its financial statements.</font></div><div style="line-height:120%;padding-bottom:10px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Legal Accruals</font></div><div style="line-height:120%;padding-bottom:10px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In addition to commitments and obligations in the ordinary course of business, from time to time, the Company is subject to various claims, pending and potential legal actions, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of its business. Management assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in the consolidated financial statements. An estimated loss contingency is accrued in the consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because evaluating legal claims and litigation results are inherently unpredictable and unfavorable results could occur, assessing contingencies is highly subjective and requires judgments about future events. When evaluating contingencies, management may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed or asserted against the Company may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of a potential liability. Management regularly reviews contingencies to determine the adequacy of financial statement accruals and related disclosures. The amount of ultimate loss may differ from these estimates. It is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. Whether any losses finally determined in any claim, action, investigation or proceeding could reasonably have a material effect on the Company's business, financial condition, results of operations or cash flows will depend on a number of variables, including: the timing and amount of such losses; the structure and type of any remedies; the significance of the impact any such losses, damages or remedies may have on the consolidated financial statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors.</font></div><div style="line-height:120%;padding-bottom:10px;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Class Action Lawsuit (</font><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Smith v. LifeVantage Corp</font><font style="font-family:inherit;font-size:10pt;font-weight:bold;">.): </font><font style="font-family:inherit;font-size:10pt;">On January 24, 2018, a purported class action was filed in the United States District Court for the District of Connecticut, entitled&#160;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Smith v. LifeVantage Corp</font><font style="font-family:inherit;font-size:10pt;">., Case No. 3:18-cv-a35 (D. Connecticut filed Jan. 24, 2018). In this action, plaintiff alleged that the Company, its Chief Executive Officer, Chief Sales Officer and Chief Marketing Officer operated a pyramid scheme in violation of a variety of federal and state statutes, including RICO and the Connecticut Unfair Trade Practices Act. On April 16, 2018, the Company filed motions with the court to dismiss the complaint against LifeVantage, dismiss the complaint against the Company's executives, transfer the venue of the case from the State of Connecticut to the State of Utah, and contest class certification. On July 23, 2018, the parties filed a stipulation with the Court agreeing to transfer the case to the Federal District Court for Utah. On September 20, 2018, Plaintiffs filed an amended complaint in Utah. As per the parties stipulated agreement, plaintiff's amended complaint dropped the RICO and Connecticut state law claims and removed the Company's Chief Sales Officer and Chief Marketing Officer as individual defendants (the Chief Executive Officer remains a defendant in the case). However, the amended complaint adds a new antitrust claim, alleging that the Company fraudulently obtained patents for its products and is attempting to use those patents in an anti-competitive manner. LifeVantage filed a Motion to Dismiss the amended complaint on November 5, 2018, Plaintiffs filed a response to LifeVantage&#8217;s Motion to Dismiss on December 17, 2018, and LifeVantage filed a reply brief on January 10, 2019. With the matter now being fully briefed, the Court can issue a ruling based on the briefs submitted by the parties or schedule a hearing for oral argument before entering a decision on the motion. The Company has not established a loss contingency accrual for this lawsuit as it believes liability is not probable or estimable, and the Company plans to vigorously defend against this lawsuit. Nonetheless, an unfavorable resolution of this matter could have a material adverse effect on the Company's business, results of operations or financial condition.</font></div><div style="line-height:120%;padding-bottom:10px;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Other Matters.</font><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;"> </font><font style="font-family:inherit;font-size:10pt;">In addition to the matters described above, the Company also may become involved in other litigation and regulatory matters incidental to its business and the matters disclosed in this quarterly report on Form 10-Q, including, but not limited to, product liability claims, regulatory actions, employment matters and commercial disputes. The Company intends to defend itself in any such matters and does not currently believe that the outcome of any such matters will have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.</font></div></div>
us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;padding-bottom:10px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company prepares the condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (GAAP). In preparing these statements, the Company is required to use estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. On an ongoing basis, the Company reviews its estimates, including those related to inventory valuation and obsolescence, sales returns, income taxes and tax valuation reserves, transfer pricing methodology and positions, impairment of receivables, share-based compensation, and loss contingencies.</font></div></div>

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