Financial Analysis

Commitments and Contingencies Contingencies The Company accounts for contingent liabilities in accordance with ASC 450, Contingencies . 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 Companys 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 June 30, 2025, and based on the assessment there are no probable loss contingencies requiring accrual or disclosures within its financial statements. Legal Accruals 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 matte …

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Long-Term Debt On March 30, 2016, t he Company entered into a loan agreement (the 2016 Loan Agreement) and a security agreement (the 2016 Security Agreement). The 2016 Loan Agreement provides for a term loan in an aggregate principal amount of $10.0 million ( the 2016 Term Loan) and a revolving loan facility in an aggregate principal amount not to exceed $2.0 million (the 2016 Revolving Loan, and collectively with the 2016 Term Loan, the 2016 Loan Agreement, and the 2016 Security Agreement, and together with the amendments described below, the 2016 Credit Facility). The 2016 Credit Facility was subsequently amended, among other things, to increase the available borrowing under the revolving loan facility to $5.0 million. On March 31, 2024, the 2016 Credit Facility reached the maturity date and was terminated. As of March 31, 2024, there was no balance outstanding under the 2016 Credit Facility. On April 12, 2024, the Company entered into a Loan Agreement (the Loan Agreement) with Bank of America, N.A., as Lender (the Lender). In connection with the Loan Agreement and on the same date, the Company, Lifeline Nutraceuticals Corporation, as Guarantor (the Guarantor), and the Lender also entered into a Continuing and Unconditional Guaranty (the Continuing and Unconditional Guaranty) and a Security and Pledge Agreement (the Security and Pledge Agreement). The Loan Agreement provides for a revolving line of credit in an aggregate principal amount not to exceed $5.0 million (the Line …

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Reserves for sales returns consist of the following (in thousands): Years ended June 30, 2025 2024 Beginning balance $ 133 $ 129 Additions 2,759 1,622 Returns (2,655) (1,618) Ending balance $ 237 $ 133

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Stock-Based Compensation Long-Term Incentive Plans Equity-Settled Plans The Company adopted, and the stockholders approved, the 2017 Long-Term Incentive Plan (the 2017 Plan), effective February 16, 2017, to provide incentives to eligible employees, directors, and consultants. T he initial share pool approved was 650,000 shares. On November 9, 2023, the stockholders approved amendments to the 2017 Plan to increase the number of shares of the Companys common stock that are available for issuance under the 2017 plan by 1,138,000 shares. As of June 30, 2025, a maximum of 5,105,000 shares of the Companys common stock can be issued under the 2017 Plan in connection with the grant of awards which is calculated as the sum of (i) 4,630,000 shares and (ii) up to 475,000 shares previously reserved for issuance under the Companys prior 2010 Long Term Incentive Plan, including shares returned upon cancellation, termination or forfeiture of awards that were previously granted under that plan. Outstanding stock options awarded under the 2017 Plan have exercise prices of $4.44 per share, vest over a three year vesting period, and have a contractual term of ten years. Awards expire in accordance with the terms of each award and, upon expiration of the award, the shares subject to the award are added back to the 2017 Plan. As of June 30, 2025, under the 2017 Plan, there were stock option awards outstanding, net of awards expired, for an aggregate of 0.1 million shares of the Companys common st …

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Income Taxes The income tax expense for the fiscal years ended June 30, 2025 and 2024 consists of the following (in thousands): Years ended June 30, 2025 2024 Income before income taxes: Domestic $ 10,397 $ 2,940 International 1,846 1,410 $ 12,243 $ 4,350 Current taxes: Federal $ 2,925 $ 1,457 State 708 246 Foreign 491 984 Total current income tax provision $ 4,124 $ 2,687 Deferred taxes: Federal $ (1,464) $ (1,281) State (341) (151) Foreign 119 158 Total deferred income tax provision $ (1,686) $ (1,274) Net income tax provision $ 2,438 $ 1,413 The effective income tax rate for the fiscal years ended June 30, 2025 and 2024 differs from the U.S. Federal statutory income tax rate due to the following: Years ended June 30, 2025 2024 Federal statutory income tax rate 21.0 % 21.0 % State income taxes, net of federal benefit 3.4 % 1.2 % Foreign tax rate difference (0.4) % 8.0 % Tax return to provision true-up 0.4 % (4.3) % Limit on future stock compensation due to 162(m) 4.0 % 2.8 % Foreign withholding tax 0.8 % 2.6 % Other differences 0.7 % 1.6 % Revalue of deferred for change in federal tax rate 0.0 % 0.0 % Permanent differences: stock-based compensation (6.2) % (8.3) % current year section 162(m) limitation 0.9 % 7.0 % foreign derived intangible income deduction (1.4) % (0.7) % tax credits (4.8) % (12.1) % meals and entertainment 0.6 % 1.3 % removal of additional permanent reinvestment assertions 0.6 % 1.2 % change in uncertain tax positions (0.4) % 1.2 % accrual for foreign tax …

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Leases The Company has operating leases for current corporate offices and certain equipment. These leases have remaining terms of approximately one to 6.5 years. As of June 30, 2025, the weighted average remaining lease term and weighted average discount rate for operating leases was 5.91 years and 3.17%, respectively. As of June 30, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases was 6.90 years and 3.46%, respectively. The components of lease expense for the fiscal years ended June 30, 2025 and 2024, were as follows (in thousands): Years ended June 30, 2025 2024 Operating lease expense Operating lease cost $ 1,881 $ 1,913 Variable lease cost 154 174 Short-term lease cost 11 47 Total lease expense $ 2,046 $ 2,134 Supplemental cash flow information related to operating leases was as follows (in thousands): June 30, 2025 June 30, 2024 Operating cash outflows from operating leases $ 2,284 $ 2,187 Right-of-use assets obtained in exchange for lease obligations $ $ 2,475 Maturity of lease liabilities at June 30, 2025 are as follows (in thousands): Year ended June 30, Amount 2026 $ 2,214 2027 2,195 2028 2,073 2029 1,772 2030 1,817 Thereafter 2,805 Total 12,876 Less: imputed interest (1,198) Present value of lease liabilities $ 11,678 …

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New Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), expanding segment disclosure requirements. The amendments require enhanced disclosure for certain segment items and required disclosure on how management uses reported measures to assess segment performance. The amendments do not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments. ASU 2023-07 is effective for the Companys annual periods beginning July 1, 2024, and for interim periods beginning July 1, 2025, with early adoption permitted. The Company adopted ASU 2023-07 for the fiscal year beginning July 1, 2024. See Note 13 for expanded segment disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09). The guidance requires disclosure of disaggregated income taxes paid, prescribes standardized categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for the Companys annual periods beginning July 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures. In November 2024, the FASB issued ASU 2024-03, In …

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Revenue Revenue is recognized when control of the promised goods or services are transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. The Company generates the majority of its revenue through product sales to customers. These products include the Protandim line of dietary supplements, the LifeVantage line of dietary supplements that include the MindBody GLP-1 System , Omega+, ProBio, IC Bright , the Rise AM & Reset PM System , D3+, and Daily Wellness, PhysIQ Fat Burn and Prebiotic dietary supplements, TrueScience skin and hair care products and Liquid Collagen, Petandim , our companion pet supplement formulated to combat oxidative stress in dogs, and AXIO nootropic energy drink mixes. The Company ships most of its product directly to the consumer and receives substantially all payment for product sales in the form of credit card receipts. Revenue from direct product sales to customers is recognized upon shipment, which is when passage of title and risk of loss occurs. For items sold in packs and bundles, the Company determines the standalone selling price at contract inception for each distinct good and then allocates the transaction price on a relative standalone selling price basis. Any discounts are accounted for as a direct reduction to the tran …

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Segment Information The Company operates in a single operating segment by selling products directly to customers through an international network of independent consultants that operates in an integrated manner from market to market. The Company manages its business primarily by managing its international network of independent consultants through similar commission plans. Most products available to customers in the United States are available to customers across all markets. These products are purchased through third-party manufacturers by the US Corporate office and sold to each international market. Pricing for all products is determined at the US Corporate office. Accordingly, for disclosure purposes, the Company has a single reporting segment, which is reported on the Companys consolidated financial statements. The Chief Operating Decision Maker (CODM) is the Companys Chief Executive Officer. The CODM regularly reviews consolidated financial information and performance used to make decisions about the Company as a whole and without distinguishing or grouping of operations based on asset type, revenue, geographic location, tenant or other factors. The CODM evaluates performance through consolidated financial budget-to-actual variances on a monthly and quarterly basis and allocates resources based on net income as reported in the consolidated statements of operations. The measure of segment assets is reported on the balance sheet as total consolidated assets. Total expendi …

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Summary of Significant Accounting Policies Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. Use of Estimates The Company prepares the consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (GAAP). In preparing these statements, the Company is required to use estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. On an ongoing basis, the Company reviews its estimates, including, but not limited to, those related to inventory valuation and obsolescence, sales returns, income taxes and tax valuation reserves, transfer pricing methodology and positions, impairment of assets, stock-based compensation, and loss contingencies. Foreign Currency Translation A portion of the Companys business operations occurs outside the United States. The local currency of each of the Companys subsidiaries generally is its functional currency. All assets and liabilities are translated into U.S. Dollars at exchange rates existing at the balance sheet dates, revenue and expense …

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Stockholders Equity During the fiscal years ended June 30, 2025 and 2024, the Company issued zero shares of common stock as a result of the exercise of options. During the fiscal years ended June 30, 2025 and 2024, the Company issued 0.4 million and 1.0 million shares, respectively, under the Companys equity incentive plans. During the fiscal years ended June 30, 2025 and 2024, 0.2 million and 0.2 million shares, respectively, of restricted stock were canceled or surrendered as payment of tax withholding upon vesting. During the fiscal years ended June 30, 2025 and 2024 , the Company sold 44,000 and 0.1 million shares under its 2019 Employee Stock Purchase Plan, respectively. On November 27, 2017, the Companys board approved a stock repurchase program, which was subsequently amended on February 1, 2019. Under the currently approved stock repurchase program, the Company is authorized to purchase up to $60 million through December 31, 2026. The stock repurchase program permits the Company to purchase shares from time to time through a variety of methods, including in the open market, through privately negotiated transactions or other means as determined by the Companys management, in accordance with applicable securities laws. As part of the stock repurchase program, the Company may enter into a pre-arranged stock repurchase plan which operates in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. Accordingly, any transact …

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Note 15 Subsequent Events On September 3, 2025, the Company entered into an Asset Purchase Agreement to acquire critical assets of a Global Organics Merchants, LLC, dba LoveBiome. The transaction is expected to close by mid-October 2025, subject to satisfaction of customary closing conditions and regulatory requirements. The Company has not yet determined the accounting purchase price allocation of the purchase consideration described above, which includes evaluating the fair value of the acquired assets and the valuation of contingent consideration to be transferred. …

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