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Reliv International Reports Second-Quarter Financial Results

CHESTERFIELD, MO--(Marketwired - July 31, 2014) - Reliv International, Inc. (RELV), a maker of nutritional supplements that promote optimal health, today reported its financial results for the second quarter of 2014.

Net sales for the quarter were $14.5 million, a 6.2 percent decrease from the second quarter last year. Net U.S. sales totaled $10.8 million, down from second-quarter 2013 net sales of $11.8 million. Net sales outside of the United States increased 1.8 percent in the second quarter of 2014 compared to the prior-year quarter, buoyed by a sales increase of 14.5 percent in Europe.

The net loss for the second quarter of 2014 was $289,000 or $0.02 per diluted share, compared to a net loss of $214,000 or $0.02 per diluted share in the 2013 second quarter. The loss from operations for the second quarter of 2014 was $475,000 compared to a loss of $222,000 in the same quarter of 2013.

Net sales in Europe increased to $2.24 million in the second quarter of 2014 compared to $1.96 million in the prior-year second quarter. "Europe continues to lead all markets in growth," said Robert L. Montgomery, chairman and chief executive officer of Reliv. "The second quarter of 2014 marked Reliv Europe's 19th consecutive quarter of increased net sales when compared to the prior-year quarter. Sales in Reliv Europe made up 15.5% of total Reliv sales in the second quarter. We anticipate continued growth and are taking steps to build on this momentum."

"In the United States, Reliv lowered the sales volume needed to qualify for higher distributor profit levels as a promotion in the fall of 2013 and made those reduced qualification levels permanent starting in 2014," said Montgomery. "We believe in the long term that this change will make the Reliv business opportunity more accessible to new people and facilitate distributor advancement. In the short term, the change has not yet increased the number of new distributors to make up for the reduced volume qualification requirements. We have developed strategies and are actively pursuing others to expand our distributor base."

"One of these strategies is the LunaRich® Super Pack, launched at the end of the first quarter of this year. The Super Pack leverages both our new qualification level structure and our exclusive rights to LunaRich technology to create an efficient new way for distributors to quickly move product," Montgomery said. "The Super Pack includes a four-month supply of our two most popular products, Reliv Now® and LunaRich X™, and offers an immediate 25% discount on the retail price of the Super Pack for those who sign up as distributors. Ordering additional Super Packs provides additional discount incentives. We believe the Super Pack provides a clear focus for current distributors and simplifies getting people started with Reliv."

Reliv introduced a new online business success training program for distributors on May 31. "The training program walks distributors through every step in the business-building process, from identifying prospects to getting new distributors started," Montgomery said. "Short videos featuring Reliv's top leaders provide instruction and direct viewers to Reliv's most popular sales tools. Our new webinar series, launched in July, complements the business training with monthly updates on the latest promotions, events and other Reliv news. The training program and webinar series represent a new level of online engagement for distributors and a new means for Reliv to communicate and install sales initiatives. We believe this will lead to increased business activity in the months to come."

"Our strategic initiative to upgrade web-based technology continues, with a focus on enhancing our distributors' online presence and facilitating new online sales opportunities. This will be a key step of a series of technology upgrades we believe will help fuel sales growth in the months and years ahead," Montgomery said.

Net sales for the first six months of 2014 were $28.9 million, which represents a 15.6 percent decrease from the same period in 2013. Reliv's international net sales increased 1.2 percent in the first half of 2014 compared with the first half of last year. In the United States, net sales declined 20.2 percent.

Reliv reported a net loss of $440,000, or $0.03 per diluted share in the first six months of 2014, compared to net loss of $19,000 or $0.00 per diluted share in the same period of 2013.

Reliv's total distributor count was 50,700 as of June 30, 2014 -- a decrease of 5.0 percent from the same date in 2013 -- of which 6,920 are Master Affiliate level and above, an increase of 17.1 percent. Master Affiliate is the level at which distributors are eligible to earn generation royalties.

Reliv had cash and cash equivalents of $4.93 million as of June 30, 2014. This amount compares to $6.66 million as of December 31, 2013 and $4.26 million as of this date last year.

About Reliv International, Inc.
Reliv International, based in Chesterfield, MO, produces nutritional supplements that promote optimal nutrition along with premium skincare products. Reliv supplements address essential nutrition, weight loss, athletic performance, digestive health, women's health, anti-aging and healthy energy. Reliv is the exclusive provider of LunaRich® products, which optimize levels of lunasin, the peptide behind many of soy's health benefits. The company sells its products through an international network marketing system of independent distributors in 15 countries. Learn more about Reliv at www.reliv.com, or on Facebook, Twitter or YouTube.

Statements made in this news release that are not historical facts are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" or similar expressions. Factors that could cause actual results to differ are identified in the public filings made by Reliv with the Securities and Exchange Commission. More information on factors that could affect Reliv's business and financial results are included in its public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which are available on the Company's web site, www.reliv.com.

- FINANCIAL HIGHLIGHTS FOLLOW -

Reliv International, Inc. and Subsidiaries
                 
Condensed Consolidated Balance Sheets
 
    June 30,
2014
  December 31,
2013
       
    (Unaudited)            
Assets                
Current Assets:                
  Cash and cash equivalents   $4,929,321   $6,656,798        
  Accounts receivable, less allowances of $29,100 in 2014 and $31,800 in 2013    
170,827
   
148,630
       
       
  Accounts and note due from employees and distributors   141,345   129,852        
  Inventories   5,351,760   5,214,690        
  Other current assets   1,528,073   1,006,099        
                 
Total current assets   12,121,326   13,156,069        
                 
Other assets   4,990,754   4,511,360        
Intangible assets, net   3,060,839   3,195,903        
Net property, plant and equipment   6,517,160   6,735,419        
                 
Total Assets   $26,690,079   $27,598,751        
                 
Liabilities and Stockholders' Equity                
                 
Total current liabilities   $7,019,286   $6,649,345        
Long-term debt, less current maturities   3,488,876   3,781,607        
Other non-current liabilities   427,136   1,037,327        
Stockholders' equity   15,754,781   16,130,472        
                 
Total Liabilities and Stockholders' Equity   $26,690,079   $27,598,751        
                 
                 
Consolidated Statements of Operations                
    Three months
ended June 30
  Six months
ended June 30
    2014   2013   2014   2013
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Product sales   $13,355,370   $14,165,463   $26,661,151   $31,054,921
Handling & freight income   1,120,209   1,259,945   2,279,316   3,227,751
                 
Net Sales   14,475,579   15,425,408   28,940,467   34,282,672
                 
Costs and expenses:                
  Cost of products sold   3,000,412   3,057,940   5,887,262   6,961,798
  Distributor royalties and commissions   5,232,967   5,617,245   10,440,254   12,620,448
  Selling, general and administrative   6,716,826   6,972,599   13,257,693   14,488,088
                 
Total Costs and Expenses   14,950,205   15,647,784   29,585,209   34,070,334
                 
Income (loss) from operations   (474,626)   (222,376)   (644,742)   212,338
                 
Other income (expense):                
Interest income   32,148   38,668   68,272   75,832
Interest expense   (25,367)   (18,493)   (49,635)   (35,995)
Other income (expense)   31,079   (64,544)   6,389   (91,119)
                 
Income (loss) before income taxes   (436,766)   (266,745)   (619,716)   161,056
Provision (benefit) for income taxes   (148,000)   (53,000)   (180,000)   180,000
                 
Net Loss   ($288,766)   ($213,745)   ($439,716)   ($18,944)
                 
                 
Loss per common share - Basic   ($0.02)   ($0.02)   ($0.03)   $0.00
Weighted average shares   12,666,000   12,616,000   12,666,000   12,617,000
                 
Loss per common share - Diluted   ($0.02)   ($0.02)   ($0.03)   $0.00
Weighted average shares   12,666,000   12,616,000   12,666,000   12,617,000
                 
Cash dividends declared per common share   $0.00   $0.02   $0.00   $0.02
                         
                         
Reliv International, Inc. and Subsidiaries
                                 
Net sales by Market
(in thousands)                                
    Three months ended June 30,     Change From  
    2014
    2013
    Prior Year
 
    Amount   % of Net
Sales
    Amount   % of Net
Sales
    Amount     %  
                                 
United States   $10,815   74.7 %   $11,828   76.7 %   $ (1,013 )   -8.6 %
Australia/New Zealand   429   3.0 %   524   3.4 %   (95 )   -18.1 %
Canada   357   2.5 %   372   2.4 %   (15 )   -4.0 %
Mexico   190   1.3 %   256   1.7 %   (66 )   -25.8 %
Europe   2,244   15.5 %   1,960   12.7 %   284     14.5 %
Asia   441   3.0 %   485   3.1 %   (44 )   -9.1 %
                                 
Consolidated total   $14,476   100.0 %   $15,425   100.0 %   $(949 )   -6.2 %
                                 
                                 
Net sales by Market                                
(in thousands)                                
    Six months ended June 30,     Change From  
    2014
    2013
    Prior Year
 
    Amount   % of Net
Sales
    Amount   % of Net
Sales
    Amount     %  
                                 
United States   $21,507   74.3 %   $26,938   78.6 %   $(5,431 )   -20.2 %
Australia/New Zealand   861   3.0 %   973   2.8 %   (112 )   -11.5 %
Canada   647   2.2 %   926   2.7 %   (279 )   -30.1 %
Mexico   415   1.4 %   534   1.6 %   (119 )   -22.3 %
Europe   4,573   15.8 %   3,979   11.6 %   594     14.9 %
Asia   937   3.3 %   933   2.7 %   4     0.4 %
                                 
Consolidated total   $28,940   100.0 %   $34,283   100.0 %   $(5,343 )   -15.6 %
                                 
The following table sets forth, as of June 30, 2014 and 2013, 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 Affiliates and above in their downline organization. For the June 30, 2014 data, the active distributor count for Europe includes our preferred customers in France. This program began in mid-2013 and the Europe active distributor count as of 6/30/14 includes 2,630 preferred customers. 
 
Active Distributors and Master Affiliates and above by Market
                       
  As of 6/30/2014   As of 6/30/2013   Change in %
  Total
Active
Distri-
butors
  Master
Affiliates
and
Above
  Total
Active
Distri-
butors
  Master
Affiliates
and
Above
  Total
Active
Distri-
butors
  Master
Affiliates
and
Above
                       
United States 36,440   5,170   38,860   4,180   -6.2%   23.7%
Australia/New Zealand 1,300   150   1,570   200   -17.2%   -25.0%
Canada 1,270   250   1,260   180   0.8%   38.9%
Mexico 1,130   140   1,150   130   -1.7%   7.7%
Europe 8,190   880   6,490   780   26.2%   12.8%
Asia 2,370   330   4,060   440   -41.6%   -25.0%
                       
Consolidated total 50,700   6,920   53,390   5,910   -5.0%   17.1%