Form 10-Q RELIV INTERNATIONAL INC For: Mar 31

PART I -- FINANCIAL INFORMATION

Item No. 1 - Financial Statements

Reliv International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

 

See notes to financial statements.

 

 

Reliv International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

 

See notes to financial statements.

 

 

Reliv International, Inc. and Subsidiaries

Condensed Consolidated Statements of Net

Income (Loss) and Comprehensive Income (Loss)

 

 

 See notes to financial statements.

 

 

Reliv International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

See notes to financial statements.

 

 

Reliv’ International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

 

March 31, 2018

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report includes both historical and “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future results. Words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or similar words are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from the views and expectations set forth in this quarterly report on Form 10-Q. We disclaim any intent or obligation to update any forward-looking statements after the date of this annual report to conform such statements to actual results or to changes in our opinions or expectations.

 

Item No. 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis discusses the financial condition and results of our operations on a consolidated basis, unless otherwise indicated.

 

Overview

 

We are a developer, manufacturer and marketer of a proprietary line of nutritional supplements addressing basic nutrition, specific wellness needs, weight management and sports nutrition. We sell our products through an international network marketing system utilizing independent distributors. Sales in the United States represented approximately 76.7% of worldwide net sales for the three months ended March 31, 2018 and 80.3% of worldwide net sales for the three months ended March 31, 2017. Our international operations currently generate sales through distributor networks with facilities in Australia, Canada, Indonesia, Malaysia, Mexico, the Philippines, and the United Kingdom. We also operate in Ireland, France, Germany, Austria and the Netherlands from our United Kingdom distribution center, in New Zealand from our Australia office, and in Singapore from our Malaysia office.

 

We derive our revenues principally through product sales made by our global independent distributor base, which, as of March 31, 2018, consisted of approximately 32,100 distributors and preferred customers. Our sales can be affected by several factors, including our ability to attract new distributors and retain our existing distributor base, our ability to properly train and motivate our distributor base and our ability to develop new products and successfully maintain our current product line.

 

All of our sales to distributors outside the United States are made in the respective local currency; therefore, our earnings and cash flows are subject to fluctuations due to changes in foreign currency rates as compared to the U.S. dollar. As a result, exchange rate fluctuations may have an effect on sales and gross margins. U.S. generally accepted accounting practices require that our results from operations be converted to U.S. dollars for reporting purposes. Consequently, our reported earnings may be significantly affected by fluctuations in currency exchange rates, generally increasing with a weaker U.S. dollar and decreasing with a strengthening U.S. dollar. Products manufactured by us for sale to our foreign subsidiaries are transacted in U.S. dollars. From time to time, we enter into foreign exchange forward contracts to mitigate our foreign currency exchange risk.

 

Components of Net Sales and Expense

 

Product sales represent the actual product purchase price typically paid by our distributors, after giving effect to distributor allowances, which can range from 10% to 40% of suggested retail price, depending on the rank of a particular distributor. Handling and freight income represents the amounts billed to distributors for shipping costs. We record net sales and the related commission expense when the merchandise is shipped.

 

Our primary expenses include cost of products sold, distributor royalties and commissions and selling, general and administrative expenses.

 

 

Cost of products sold primarily consists of expenses related to raw materials, labor, quality control and overhead directly associated with production of our products and sales materials, as well as shipping costs relating to the shipment of products to distributors, and duties and taxes associated with product exports. Cost of products sold is impacted by the cost of the ingredients used in our products, the cost of shipping distributors’ orders, along with our efficiency in managing the production of our products.

 

Distributor royalties and commissions are monthly payments made to distributors based on products sold in their downline organization. Based on our distributor agreements, these expenses have typically approximated 23% of sales at suggested retail. Wholesale pricing discounts on distributor orders are based on the retail value of the product. Distributor royalties and commissions are paid on an amount referred to as the business value (“BV”), which typically ranges between 80% and 90% of the retail price of each product. Also, we include other sales leadership bonuses, such as Ambassador bonuses, within this caption. Overall, distributor royalties and commissions remain directly related to the level of our sales and should continue at comparable levels as a percentage of net sales going forward.

 

Selling, general and administrative expenses include the compensation and benefits paid to our employees, except for those in manufacturing, all other selling expenses, marketing, promotional expenses, travel and other corporate administrative expenses. These other corporate administrative expenses include professional fees, non-manufacturing depreciation and amortization, occupancy costs, communication costs and other similar operating expenses. Selling, general and administrative expenses can be affected by a number of factors, including staffing levels and the cost of providing competitive salaries and benefits; the amount we decide to invest in distributor training and motivational initiatives; and the cost of regulatory compliance.

 

 

Results of Operations  

  

Net Sales. Overall net sales decreased by 21.7% in the three months ended March 31, 2018 compared to the same period in 2017. During the first quarter of 2018 (“Q1 2018”), sales in the United States decreased by 25.2% and international sales decreased by 7.4% over the prior-year period. International sales, when reported in U.S. dollars, were positively impacted by a weaker U.S. dollar versus most of the currencies we conduct business in, other than the Philippine peso. Excluding the impact of currency exchange fluctuation, international sales decreased by 13.0%.

 

          The following table summarizes net sales by geographic market for the three months ended March 31, 2018 and 2017.

 

		Three months ended March 31,
		2018								2017								Change from prior year
		Amount				% of Net Sales				Amount				% of Net Sales				Amount				%
		(dollars in thousands)
United States		$	7,670				76.7	%		$	10,259				80.3	%		$	(2,589	)			(25.2	)%
Australia/New Zealand			232				2.3				260				2.0				(28	)			(10.8	)
Canada			242				2.4				264				2.1				(22	)			(8.3	)
Mexico			107				1.1				157				1.2				(50	)			(31.8	)
Europe			1,165				11.6				1,201				9.4				(36	)			(3.0	)
Asia			587				5.9				637				5.0				(50	)			(7.8	)
Consolidated total		$	10,003				100.0	%		$	12,778				100.0	%		$	(2,775	)			(21.7	)%

 

 

The following table sets forth, as of March 31, 2018 and 2017, the number of our active distributors and Master Affiliates and above. The total number of active distributors includes Master Affiliates and above. We define an active distributor as one that enrolls as a distributor or renews his or her distributorship during the prior twelve months. Master Affiliates and above are distributors that have attained the highest level of discount and are eligible for royalties generated by Master Affiliate groups in their downline organization. We include Preferred Customers as part of our Active Distributor count, and Preferred Customers represent approximately 4,780 and 5,200 of the Active Distributor count as of March 31, 2018 and 2017, respectively.

 

		March 31, 2018								March 31, 2017								% Change
		Active Distributors and Preferred Customers				Master Affiliates and Above				Active Distributors and Preferred Customers				Master Affiliates and Above				Active Distributors and Preferred Customers				Master Affiliates and Above
United States			21,800				2,240				26,110				2,610			(16.5)	%			(14.2)	%
Australia/New Zealand			1,070				80				1,440				110			(25.7)				(27.3)
Canada			630				80				780				90			(19.2)				(11.1)
Mexico			660				60				880				60			(25.0)				---
Europe			3,630				350				4,620				410			(21.4)				(14.6)
Asia			4,310				330				3,450				310			24.9				6.5
Consolidated total			32,100				3,140				37,280				3,590			(13.9)	%			(12.5)	%

 

 

 

The following table provides key statistics related to distributor activity by market and should be read in conjunction with the following discussion.

 

Distributor Activity by Market																										International
		United States				AUS/NZ				Canada				Mexico				Europe				Asia				-- Total
Sales in USD (in 000's):
Quarter ended 3/31/2018		$	7,670			$	232			$	242			$	107			$	1,165			$	587			$	2,333
Quarter ended 3/31/2017		$	10,259			$	260			$	264			$	157			$	1,201			$	637			$	2,519
% change in sales-Q1 2018 vs. Q1 2017:
in USD			-25.2	%			-10.8	%			-8.3	%			-31.8	%			-3.0	%			-7.8	%			-7.4	%
due to currency fluctuation			-				2.8	%			4.2	%			5.1	%			10.6	%			-2.0	%			5.6	%
Sales in local currency (non-GAAP)			-25.2	%			-13.6	%			-12.5	%			-36.9	%			-13.6	%			-5.8	%			-13.0	%
# of new distributors-Q1 2018 (1)			978				41				38				83				342				539				1,043
# of new distributors-Q1 2017 (1)			1,615				66				44				83				466				701				1,360
% change			-39.4	%			-37.9	%			-13.6	%			0.0	%			-26.6	%			-23.1	%			-23.3	%
# of new Master Affiliates-Q1 2018			100				6				7				10				30				54				107
# of new Master Affiliates-Q1 2017			154				3				3				7				34				88				135
% change			-35.1	%			100.0	%			133.3	%			42.9	%			-11.8	%			-38.6	%			-20.7	%
# of Product orders-Q1 2018			26,637				1,204				631				751				3,607				6,553				12,746
# of Product orders-Q1 2017			35,008				1,452				814				1,093				4,704				5,675				13,738
% change			-23.9	%			-17.1	%			-22.5	%			-31.3	%			-23.3	%			15.5	%			-7.2	%

 

(1)  The new distributor totals for Q1 2018 and Q1 2017 include 782 and 1,019, respectively, new worldwide preferred customers.

 

 

Use of Non-GAAP Financial Information

 

Net sales expressed in local currency or net sales adjusted for the impact of foreign currency fluctuation are non-GAAP financial measures. We use these measurements to assess the level of business activity in a foreign market, absent the impact of foreign currency fluctuation relative to the U.S. dollar, which our local management has no ability to influence. This is a meaningful measurement to management, and we believe this is a useful measurement to provide to shareholders.

 

 

United States 

 

●

Net sales in the United States declined by 25.2% in Q1 2018 compared to the prior-year period as all measurements of distributor activity declined.

●

In Q1 2017, we launched Fit3TM, a new fitness and weight loss program. Net sales of the Fit3 product line represented 10.1% of net U.S. sales in 2017; however, net sales have declined since its introductory period and only represented 4.3% of net sales in the U.S. in Q1 2018.

●

Effective November 1, 2017, we increased suggested retail prices in the United States by an average of 4.5%, but we offered incentives on the shipping and handling charge on large orders, such as orders to qualify as a Master Affiliate. One of the effects of this price increase was to accelerate a portion of sales into October 2017 for Master Affiliate requalification that would have normally taken place in January 2018.

●

Products in the LunaRich line, including Reliv Now® and LunaRich X™, continued to perform well, constituting 17.1% and 12.4% of net sales in the United States, respectively, in Q1 2018. Reliv NOW and LunaRich X represented 15.9% and 13.1%, respectively, of net sales in the United States in the prior-year quarter.

●

Distributor enrollments and new Master Affiliate qualifications decreased by 39.4% and 35.1%, respectively, in Q1 2018 compared to the prior year quarter.

●

Distributor retention was 72.3% for the twelve month period ended March 31, 2018 compared to 71.5% for all of 2017. Distributor retention is determined by the percentage of active distributors from 2017 that renewed their distributorships in 2018.

●

Our average order size in Q1 2018 decreased by 2.8% to $388 at suggested retail value compared to the prior-year quarter. Also, the number of product orders decreased by 23.9% in Q1 2018 compared to the prior year quarter.

 

International Operations

 

●

The average foreign exchange rate for the U.S. dollar for Q1 2018 was weaker against most of the currencies in which we conduct business, except for the Philippine peso.

●

We continue to review prices and margins in all of our international markets and plan to make adjustments as needed, as we increased prices in most of our markets in 2017. We are also reviewing sales by product to phase out products with lower sales levels and gross margins as strategically appropriate.

●

Australia/New Zealand and Canadian net sales in Q1 2018 decreased by 13.6% and 12.5%, respectively, in local currency compared to the prior-year quarter as the result of decreased distributor activity in the market.

●

Net sales in Mexico decreased by 36.9% in local currency in Q1 2018 compared to the prior-year quarter. Sales in Mexico have been negatively impacted since a price increase in November 2017.

●

Net sales in Europe decreased by 13.6% in local currency in Q1 2018 compared to the prior-year quarter. Distributor activity declined both in the form of new distributor and preferred customer enrollments and number of product orders placed in the region.

●

Sales in Asia decreased by 5.8% in local currency in Q1 2018 compared to the prior-year quarter. Local currency sales in the Philippines, our largest market in the region, declined 3.8% as the Easter holiday period fell on the last week of March in 2018.

 

 

Costs and Expenses

 

The following table sets forth selected results of our operations expressed as a percentage of net sales for the three-month periods ended March 31, 2018 and 2017. Our results of operations for the periods described below are not necessarily indicative of results of operations for future periods.

 

 

Income statement data
(amounts in thousands)		Q1 2018								Q1 2017
		Amount				% of net sales				Amount				% of net sales
Net sales		$	10,003				100.0	%		$	12,778				100.0	%
Costs and expenses:
Cost of products sold			2,349				23.5				2,836				22.2
Distributor royalties and commissions			3,392				33.9				4,499				35.2
Selling, general and adminstrative			4,486				44.8				4,926				38.6
Income (loss) from operations			(224	)			(2.2	)			517				4.0
Interest income			24				0.2				26				0.2
Interest expense			(31	)			(0.3	)			(25	)			(0.2	)
Other income			10				0.1				33				0.3
Income (loss) before income taxes			(221	)			(2.2	)			551				4.3
Provision for income taxes			17				0.2				27				0.2
Net income (loss)		$	(238	)			(2.4	)%		$	524				4.1	%
Earnings (loss) per common share-Basic		$	(0.13	)						$	0.28
Earnings (loss) per common share-Diluted		$	(0.13	)						$	0.28

 

 

 

Cost of Products Sold: 

●

The cost of products sold as a percentage of net sales in Q1 2018 increased by 1.3% compared to the prior-year period. The cost of products sold as a percentage of net sales in Q1 2018 was negatively impacted by lower plant utilization and promotions in the United States that reduced our handling and freight income.

 

Distributor Royalties and Commissions:

●

Distributor royalties and commissions as a percentage of net sales for Q1 2018 decreased by 1.3% of net sales when compared to the prior-year period. Over the course of 2017, we increased the prices of our products in most of our markets, with prices increased in the U.S. and Canada effective November 1, 2017. As part of the price increase, we did not increase the BV of the products. The BV represents the amount per commissionable product that is paid in distributor royalties and commissions. This accounts for the slight decrease in royalties and commissions expense as a percentage of net sales.

 

 

Selling, General and Administrative Expenses:

●

Selling, general and administrative expenses declined by $440,000 in Q1 2018 compared to the prior-year period.

●

Salaries, other staffing expenses, benefits, and incentive compensation decreased in the aggregate by $203,000 in Q1 2018, compared to the prior-year period.

●

Sales and marketing expenses decreased by $241,000 in Q1 2018 compared to the prior-year period. Components of the decrease include:

o

$166,000 decrease in Star Director and other distributor bonuses, credit card fees, and other expenses related to the level of sales.

o

$74,000 decrease in video production and other sales development expense in Q1 2018 compared to the prior-year period. Much of these expenses in Q1 2017 were related to the Fit3 new product launch.

Offsetting increases include:

o

$71,000 increase in distributor conferences and meeting expenses.

●

Other general and administrative expenses decreased by $28,000 in Q1 2018 versus the prior-year period.

 

Other Income/Expense:

●

The other income in Q1 2018 and Q1 2017 is primarily the result of foreign currency exchange gains on intercompany debt denominated in U.S. dollars in certain of our subsidiaries.

 

Income Taxes:

●

We reported an income tax expense of $17,000 for Q1 2018 related to income taxes on our earnings in our Philippine entity and minimum U.S. state income tax expense.

●

See Note 5 of the Condensed Consolidated Financial Statements for additional detail regarding income taxes.

 

Net Income:

●

We reported a net loss of $238,000 in Q1 2018 compared to a net income of $524,000 in the prior-year quarter primarily the result of the decrease in net sales in the United States.

 

 

Financial Condition, Liquidity and Capital Resources 

 

During the first three months of 2018, we generated $500,000 of net cash from operating activities, $17,000 was provided by investing activities, and we used $108,000 in financing activities. This compares to $530,000 of net cash provided by operating activities, $235,000 used in investing activities, and $114,000 used in financing activities in the same period of 2017. Cash and cash equivalents increased by $404,000 to $3.68 million as of March 31, 2018 compared to December 31, 2017.

 

Significant changes in working capital items consisted of a decrease in inventory of $394,000, an increase in prepaid expenses/other current assets of $320,000, and an increase of $561,000 in accounts payable and accrued expenses in the first three months of 2018. The decrease in inventory is the result of a decrease in production to correspond to the decrease in sales, and the increase in prepaid expenses/other current assets primarily represents the annual premium payments made in the first quarter of 2018 on most of the corporate business insurance policies. The increase in accounts payable and accrued expenses is result of a financing arrangement for our annual corporate insurance policy renewals, coupled with an increase in payroll and payroll taxes payable as the result of our change from a semi-monthly to a bi-weekly payroll cycle in the United States.

 

Investing activities during the first three months of 2018 consisted of a net investment of $11,000 for capital expenditures, offset by payments received on a distributor note receivable of $28,000. Financing activities during the first three months of 2018 consisted of principal payments of $108,000 on long-term borrowings.

 

Stockholders’ equity decreased to $13.79 million at March 31, 2018 compared to $14.36 million at December 31, 2017. The decrease is primarily due to our net loss during the first three months of 2018 of $238,000 and a reduction of $368,000 due to the recognition of deferred revenue under ASU No. 2014-09. Our working capital balance was $1.77 million at March 31, 2018 compared to $2.14 million at December 31, 2017. The current ratio at March 31, 2018 was 1.25 compared to 1.34 at December 31, 2017.

 

Effective September 30, 2015, the Company entered into a series of lending agreements with our primary lender which included agreements for a $3.25 million term loan and a $3.5 million revolving credit facility. These lending agreements replaced similar borrowings under agreements with the Company’s former primary lender.

 

 

The $3.25 million term loan was for a period of three years and required monthly term loan payments, under a ten-year amortization, consisting of principal of $27,080 plus interest with a balloon payment for the outstanding balance due and payable on September 30, 2018. Effective with an April 11, 2018 loan agreement amendment, under similar monthly payment and interest rate terms, the term loan’s balloon payment due date has been extended from September 30, 2018 to April 29, 2019. The term loan's interest rate is based on the 30-day LIBOR plus 2.25% and was 3.94% at March 31, 2018.

 

The $3.5 million revolving line of credit agreement, originally dated September 30, 2015, accrues interest at a floating interest rate based on the 30-day LIBOR plus 2.25% and had an original term of one year. Effective September 30, 2016, the revolving line of credit agreement was extended under similar terms to April 30, 2018. Effective with an April 11, 2018 loan amendment, the revolving line of credit’s term has been extended from April 30, 2018 to April 29, 2019 and the revolver’s maximum borrowing amount has been reduced from $3.5 million to $2.0 million. At March 31, 2018, outstanding borrowings under the revolving line of credit are $500,000. The interest rate on revolver borrowings is identical to the term loan.

 

Borrowings under the lending agreements continue to be secured by all tangible and intangible assets of the Company, a whole life insurance policy on the life of the Company's Chief Executive Officer, which was assigned to the lender, and by a mortgage on the real estate of the Company's headquarters.

 

The loan agreements, including the April 2018 loan amendment, include quarterly financial covenants requiring the Company to maintain net tangible worth of not less than $9.5 million, and i) a cumulative minimum EBITDA requirement of $200,000; $400,000; $600,000; and $800,000 for the fiscal periods ending March 30, 2018; June 30, 2018; September 30, 2018; and December 31, 2018; respectively; and ii) a minimum EBITDA of $200,000 for the quarter ended March 31, 2019.

 

As defined, EBITDA equals the Company's consolidated net income for such period, before interest expense, income tax expense, depreciation and amortization, and management fees, and further adjusted to exclude any gain or loss on the sale of assets, other extraordinary gains or losses, and any one-time adjustment approved by the lender.

 

At March 31, 2018, we were not in compliance with our quarterly financial loan covenant requirements. On May 4, 2018, our lender agreed to waive our non-compliance with the tangible net worth and minimum EBITDA covenants for the March 31, 2018 reporting period; however, we cannot provide any assurance that the lender will waive any financial loan covenant non-compliance in any future quarterly reporting periods. Furthermore, we are unable to provide reasonable assurance that future operating results will achieve compliance with our quarterly financial loan covenant requirements. Accordingly, we have presented our outstanding loan balances as current liabilities in the March 31, 2018 condensed consolidated balance sheets.

 

We believe that our cash on hand and our ability, if necessary, to borrow a significant portion of or liquidate the cash surrender value of our key-man life insurance policy, will be sufficient to meet our working capital requirements and debt service requirements for the next twelve months.

 

 

Critical Accounting Policies 

 

A summary of our critical accounting policies and estimates is presented in our 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2018. Except for the required adoption of ASU No. 2014-09, our critical accounting policies remain unchanged as of March 31, 2018.

  

 

Item No. 4 - Controls and Procedures

 

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has reviewed and evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2018. Based on such review and evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of March 31, 2018, to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, (a) is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms and (b) is accumulated and communicated to our management, including the officers, as appropriate to allow timely decisions regarding required disclosure. There were no material changes in our internal control over financial reporting during the first quarter of 2018 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

 

 

PART II – OTHER INFORMATION

 

 

Item No. 6 – Exhibits

 

Exhibit Number

Document

 

10.1	Second Amendment to Loan Agreement dated April 11, 2018 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (filed herewith).

 

10.2	Change in Terms Agreement (term loan) dated April 11, 2018 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (filed herewith).

 

10.3	Change in Terms Agreement (revolving credit facility) dated April 30, 2018 among Reliv International, Inc., Reliv, Inc., Reliv World Corporation, and SL Technology, Inc., as Borrowers and Enterprise Bank & Trust (filed herewith).

 

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith).

 

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith).

 

32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

 

101

Interactive Data Files, including the following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss), (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to Condensed Consolidated Financial Statements.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

RELIV’ INTERNATIONAL, INC.

 

 

By:	/s/ Robert L. Montgomery
	Robert L. Montgomery, Chairman of the Board of Directors and Chief Executive Officer
Date: May 15, 2018
By:	/s/ Steven D. Albright
	Steven D. Albright, Chief Financial Officer (and accounting officer)
Date: May 15, 2018

 

21

 

Exhibit 10.1

 

 

 

Exhibit 10.2

 

 

 

 

 

 

 

Exhibit 10.3

 

 

 

 

 

Exhibit 31.1

 

CERTIFICATION

 

 

I, Robert L. Montgomery, certify that:

 

1.     I have reviewed this quarterly report on Form 10-Q of Reliv International, Inc.;

 

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (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 and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 15, 2018

 

	/s/ Robert L. Montgomery
	Robert L. Montgomery
	Chief Executive Officer

 

 

Exhibit 31.2

 

CERTIFICATION

 

 

I, Steven D. Albright, certify that:

 

1.     I have reviewed this quarterly report on Form 10-Q of Reliv International, Inc.;

 

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (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 and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 15, 2018

 

	/s/ Steven D. Albright
	Steven D. Albright
	Chief Financial Officer

 

 

Exhibit 32

 

CERTIFICATION PURSUANT TO

 

18 U.S.C. SECTION 1350,

 

AS ADOPTED PURSUANT TO

 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of Reliv’ International, Inc. (the “Company”) for the quarterly period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Robert L. Montgomery, as Chief Executive Officer of the Company, and Steven D. Albright, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(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.

 

/s/ Robert L. Montgomery
Robert L. Montgomery
Chief Executive Officer
Date: May 15, 2018
/s/ Steven D. Albright
Steven D. Albright
Chief Financial Officer
Date: May 15, 2018

 

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being “filed” as part of the Form 10-Q or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32 is expressly and specifically incorporated by reference in any such filing.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

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