x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | | 371172197 |
(State or other jurisdiction of | | (I.R.S. Employer Identification Number) |
incorporation or organization) | | |
| | |
136 Chesterfield Industrial Boulevard | | |
Chesterfield, Missouri | | 63005 |
(Address of principal executive offices) | | (Zip Code) |
Part I Financial Information | | |
| | |
Item No. 1 | Financial Statements (Unaudited) | 1 |
Item No. 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 |
Item No. 4 | Controls and Procedures | 17 |
| | |
PART II OTHER INFORMATION | | |
| | |
Item No. 6 | Exhibits | 17 |
| | September 30 | | December 31 | | ||
| | 2013 | | 2012 | | ||
| | (unaudited) | | | | | |
Assets | | | | | | | |
| | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 5,744,193 | | $ | 5,801,042 | |
Accounts receivable, less allowances of $23,000 in 2013 and $35,700 in 2012 | | | 253,864 | | | 247,087 | |
Accounts and note due from employees and distributors | | | 137,408 | | | 109,346 | |
Inventories | | | | | | | |
Finished goods | | | 3,546,598 | | | 3,661,289 | |
Raw materials | | | 1,287,522 | | | 1,332,293 | |
Sales aids and promotional materials | | | 245,938 | | | 269,334 | |
Total inventories | | | 5,080,058 | | | 5,262,916 | |
| | | | | | | |
Refundable income taxes | | | 34,589 | | | 10,632 | |
Prepaid expenses and other current assets | | | 1,004,792 | | | 688,669 | |
Deferred income taxes | | | 317,000 | | | 371,000 | |
Total current assets | | | 12,571,904 | | | 12,490,692 | |
| | | | | | | |
Other assets | | | 236,093 | | | 206,022 | |
Cash surrender value of life insurance | | | 2,343,146 | | | 2,083,420 | |
Note receivable due from distributor | | | 1,853,146 | | | 1,923,000 | |
Intangible assets, net | | | 3,263,436 | | | 1,443,635 | |
| | | | | | | |
Property, plant and equipment: | | | | | | | |
Land and land improvements | | | 883,563 | | | 883,563 | |
Building | | | 9,932,799 | | | 9,905,967 | |
Machinery & equipment | | | 3,776,451 | | | 3,767,910 | |
Office equipment | | | 1,240,606 | | | 1,231,215 | |
Computer equipment & software | | | 2,682,818 | | | 2,666,150 | |
| | | 18,516,237 | | | 18,454,805 | |
Less: Accumulated depreciation | | | 11,636,219 | | | 11,343,033 | |
Net property, plant and equipment | | | 6,880,018 | | | 7,111,772 | |
| | | | | | | |
Total assets | | $ | 27,147,743 | | $ | 25,258,541 | |
1 | ||
| | September 30 | | December 31 | | ||
| | 2013 | | 2012 | | ||
| | (unaudited) | | | | ||
Liabilities and stockholders' equity | | | | | | | |
| | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable and accrued expenses: | | | | | | | |
Trade accounts payable and other accrued expenses | | $ | 3,099,679 | | $ | 2,924,111 | |
Distributors' commissions payable | | | 2,261,085 | | | 2,293,019 | |
Sales taxes payable | | | 373,136 | | | 283,700 | |
Payroll and payroll taxes payable | | | 369,675 | | | 484,170 | |
Total accounts payable and accrued expenses | | | 6,103,575 | | | 5,985,000 | |
| | | | | | | |
Revolving line of credit | | | 1,150,000 | | | - | |
Current maturities of long-term debt | | | 563,659 | | | 629,631 | |
Total current liabilities | | | 7,817,234 | | | 6,614,631 | |
| | | | | | | |
Noncurrent liabilities: | | | | | | | |
Long-term debt, less current maturities | | | 2,747,455 | | | 2,401,312 | |
Deferred income taxes | | | 292,000 | | | 289,000 | |
Other noncurrent liabilities | | | 695,362 | | | 371,728 | |
Total noncurrent liabilities | | | 3,734,817 | | | 3,062,040 | |
| | | | | | | |
Stockholders' equity: | | | | | | | |
Preferred stock, par value $.001 per share; 3,000,000 shares authorized; -0- shares issued and outstanding in 2013 and 2012 | | | - | | | - | |
Common stock, par value $.001 per share; 30,000,000 authorized; 14,512,252 shares issued and 12,616,031 shares outstanding as of 9/30/2013; 14,511,816 shares issued and 12,619,640 shares outstanding as of 12/31/2012 | | | 14,513 | | | 14,512 | |
Additional paid-in capital | | | 30,107,650 | | | 30,074,801 | |
Accumulated deficit | | | (8,535,799) | | | (8,557,178) | |
Accumulated other comprehensive loss: | | | | | | | |
Foreign currency translation adjustment | | | (529,593) | | | (494,550) | |
Treasury stock | | | (5,461,079) | | | (5,455,715) | |
| | | | | | | |
Total stockholders' equity | | | 15,595,692 | | | 15,581,870 | |
| | | | | | | |
Total liabilities and stockholders' equity | | $ | 27,147,743 | | $ | 25,258,541 | |
2 | ||
(unaudited) | | Three months ended September 30 | | Nine months ended September 30 | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | | | | | | | | | | | | |
Product sales | | $ | 15,241,597 | | $ | 13,571,674 | | $ | 46,296,517 | | $ | 46,081,154 | |
Handling & freight income | | | 1,297,867 | | | 1,704,862 | | | 4,525,618 | | | 5,719,730 | |
| | | | | | | | | | | | | |
Net sales | | | 16,539,464 | | | 15,276,536 | | | 50,822,135 | | | 51,800,884 | |
| | | | | | | | | | | | | |
Costs and expenses: | | | | | | | | | | | | | |
Cost of products sold | | | 3,529,027 | | | 3,052,687 | | | 10,490,825 | | | 10,174,128 | |
Distributor royalties and commissions | | | 5,974,652 | | | 5,737,908 | | | 18,595,100 | | | 19,512,681 | |
Selling, general and administrative | | | 6,633,771 | | | 6,517,747 | | | 21,121,858 | | | 21,013,651 | |
| | | | | | | | | | | | | |
Total costs and expenses | | | 16,137,450 | | | 15,308,342 | | | 50,207,783 | | | 50,700,460 | |
| | | | | | | | | | | | | |
Income (loss) from operations | | | 402,014 | | | (31,806) | | | 614,352 | | | 1,100,424 | |
| | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | |
Interest income | | | 37,240 | | | 36,681 | | | 113,072 | | | 86,858 | |
Interest expense | | | (22,187) | | | (20,124) | | | (58,182) | | | (82,338) | |
Other income / (expense) | | | 28,637 | | | 437,745 | | | (62,482) | | | 376,513 | |
| | | | | | | | | | | | | |
Income before income taxes | | | 445,704 | | | 422,496 | | | 606,760 | | | 1,481,457 | |
Provision for income taxes | | | 153,000 | | | 135,000 | | | 333,000 | | | 559,000 | |
| | | | | | | | | | | | | |
Net income | | $ | 292,704 | | $ | 287,496 | | $ | 273,760 | | $ | 922,457 | |
| | | | | | | | | | | | | |
Other comprehensive income (loss): | | | | | | | | | | | | | |
Foreign currency translation adjustment | | | 30,674 | | | 44,266 | | | (35,043) | | | 102,810 | |
| | | | | | | | | | | | | |
Comprehensive income | | $ | 323,378 | | $ | 331,762 | | $ | 238,717 | | $ | 1,025,267 | |
| | | | | | | | | | | | | |
Earnings per common share - Basic | | $ | 0.02 | | $ | 0.02 | | $ | 0.02 | | $ | 0.07 | |
Weighted average shares | | | 12,616,000 | | | 12,480,000 | | | 12,617,000 | | | 12,499,000 | |
| | | | | | | | | | | | | |
Earnings per common share - Diluted | | $ | 0.02 | | $ | 0.02 | | $ | 0.02 | | $ | 0.07 | |
Weighted average shares | | | 12,842,000 | | | 12,636,000 | | | 12,785,000 | | | 12,657,000 | |
| | | | | | | | | | | | | |
Cash dividends declared per common share | | $ | - | | $ | - | | $ | 0.02 | | $ | 0.02 | |
3 | ||
| | Nine months ended September 30 | | ||||
| | 2013 | | 2012 | | ||
| | | | | | | |
Operating activities: | | | | | | | |
Net income | | $ | 273,760 | | $ | 922,457 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | | | 678,689 | | | 724,224 | |
Stock-based compensation | | | 32,271 | | | 90,911 | |
Non-cash gain on loan modification | | | - | | | (410,320) | |
Deferred income taxes | | | 52,371 | | | 192,315 | |
Foreign currency transaction (gain)/loss | | | 51,867 | | | (34,805) | |
(Increase) decrease in accounts receivable | | | (31,966) | | | 46,912 | |
(Increase) decrease in inventories | | | 135,445 | | | (571,275) | |
(Increase) decrease in refundable income taxes | | | (23,501) | | | (154,252) | |
(Increase) decrease in prepaid expenses and other current assets | | | (325,147) | | | (201,100) | |
(Increase) decrease in other assets | | | (30,071) | | | (15,219) | |
Increase (decrease) in accounts payable & accrued expenses and other noncurrent liabilities | | | 485,710 | | | 466,794 | |
| | | | | | | |
Net cash provided by operating activities | | | 1,299,428 | | | 1,056,642 | |
| | | | | | | |
Investing activities: | | | | | | | |
Purchase of property, plant and equipment | | | (303,290) | | | (390,778) | |
Purchase of note and mortgage secured by underlying property | | | - | | | (2,000,000) | |
Payments received on distributor note receivable | | | 56,990 | | | - | |
Acquisition of lunasin technology agreement | | | (1,150,000) | | | - | |
Payment of life insurance premiums | | | (259,726) | | | (259,121) | |
| | | | | | | |
Net cash used in investing activities | | | (1,656,026) | | | (2,649,899) | |
| | | | | | | |
Financing activities: | | | | | | | |
Proceeds from revolving line of credit borrowings | | | 1,150,000 | | | - | |
Principal payments on long-term borrowings | | | (527,591) | | | (465,634) | |
Common stock dividends paid | | | (252,380) | | | (250,283) | |
Proceeds from options and warrants exercised | | | 579 | | | - | |
Purchase of stock for treasury | | | (5,364) | | | (69,386) | |
| | | | | | | |
Net cash provided by (used in) financing activities | | | 365,244 | | | (785,303) | |
| | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | (65,495) | | | 105,430 | |
| | | | | | | |
Increase (decrease) in cash and cash equivalents | | | (56,849) | | | (2,273,130) | |
| | | | | | | |
Cash and cash equivalents at beginning of period | | | 5,801,042 | | | 7,174,213 | |
| | | | | | | |
Cash and cash equivalents at end of period | | $ | 5,744,193 | | $ | 4,901,083 | |
4 | ||
Note 1 | Accounting Policies |
Basis of Presentation | |
| |
The accompanying unaudited condensed consolidated financial statements and notes thereto have been prepared in accordance with the instructions to Form 10-Q and reflect all adjustments (which primarily include normal recurring accruals) which management believes are necessary to present fairly the financial position, results of operations and cash flows. These statements, however, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States. Interim results may not necessarily be indicative of results that may be expected for any other interim period or for the year as a whole. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the annual report on Form 10-K for the year ended December 31, 2012, filed March 26, 2013 with the Securities and Exchange Commission. |
Note 2 | Basic and Diluted Earnings per Share |
Basic earnings per common share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of common shares and potential dilutive common shares that were outstanding during the period. Potential dilutive common shares consist of outstanding stock options, outstanding stock warrants, and convertible preferred stock. |
| The following table sets forth the computation of basic and diluted earnings per share: |
| | Three months ended September 30 | | Nine Months ended September 30 | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
Numerator: | | | | | | | | | | | | | |
Net income | | $ | 292,704 | | $ | 287,496 | | $ | 273,760 | | $ | 922,457 | |
| | | | | | | | | | | | | |
Denominator: | | | | | | | | | | | | | |
Denominator for basic earnings per | | | | | | | | | | | | | |
shareweighted average shares | | | 12,616,000 | | | 12,480,000 | | | 12,617,000 | | | 12,499,000 | |
Dilutive effect of employee stock options | | | | | | | | | | | | | |
and other warrants | | | 226,000 | | | 156,000 | | | 168,000 | | | 158,000 | |
| | | | | | | | | | | | | |
Denominator for diluted earnings per | | | | | | | | | | | | | |
shareadjusted weighted average shares | | | 12,842,000 | | | 12,636,000 | | | 12,785,000 | | | 12,657,000 | |
| | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.02 | | $ | 0.02 | | $ | 0.02 | | $ | 0.07 | |
Diluted earnings per share | | $ | 0.02 | | $ | 0.02 | | $ | 0.02 | | $ | 0.07 | |
Options and warrants to purchase 1,103,500 shares of common stock and 1,117,161 shares of common stock for the three months and nine months ended September 30, 2013, respectively, were not included in the denominator for diluted earnings per share because their effect would be antidilutive or because the shares were deemed contingently issuable. Options and warrants to purchase 1,143,863 shares of common stock for the three months and nine months ended September 30, 2012, respectively, were not included in the denominator for diluted earnings per share because their effect would be antidilutive or because the shares were deemed contingently issuable. |
5 | ||
Note 3 | Stock-based Compensation |
In March 2013, the Company issued performance based stock option grants totaling 230,000 shares. These option grants have an exercise price of $1.17 per share with a five-year term. The options' vesting provisions are contingent upon the Company achieving certain financial performance measurements. The aggregate estimated compensation cost related to the performance based options is $110,400; however, recognition is contingent upon performance vesting. The grant-date fair value of the options is $0.48 per share and was determined using a binomial option pricing model using an average risk-free rate of 0.90%, an average dividend yield of 1.60%, and an average volatility of 52.7%. | |
| |
The Company recognized stock-based compensation expense from all plans of approximately $10,034 and $11,927 in the three months ended September 30, 2013 and 2012, respectively. The Company recognized stock-based compensation expense from all plans of approximately $32,271 and $90,911 in the nine months ended September 30, 2013 and 2012, respectively. This expense is presented in Selling, General and Administrative in the accompanying condensed consolidated statements of net income and comprehensive income. |
Note 4 | Fair Value of Financial Instruments |
Fair value can be measured using valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). Accounting standards utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those levels: |
Level 1: | Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
Level 2: | Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets or similar assets or liabilities in markets that are not active. |
Level 3: | Unobservable inputs that reflect the reporting entity's own assumptions. |
| The carrying amount and fair value of the Company's financial instruments are approximately as follows: |
Description | | Carrying Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 | | ||||
| | | | | | | | | | | | | | | |
September 30, 2013 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Long-term debt | | $ | 4,461,114 | | $ | 4,461,114 | | | - | | $ | 4,461,114 | | - | |
Note receivable | | | 1,943,010 | | | 2,409,000 | | | - | | | 2,409,000 | | - | |
Marketable securities (a) | | | 236,000 | | | 236,000 | | $ | 236,000 | | | - | | - | |
| | | | | | | | | | | | | | | |
December 31, 2012 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Long-term debt | | $ | 3,030,943 | | $ | 3,030,943 | | | - | | $ | 3,030,943 | | - | |
Note receivable | | | 2,000,000 | | | 2,640,000 | | | - | | | 2,640,000 | | - | |
Marketable securities (a) | | | 206,000 | | | 206,000 | | $ | 206,000 | | | - | | - | |
6 | ||
Note 5 | Debt |
| | September 30 | | December 31 | | ||
| | 2013 | | 2012 | | ||
| | | | | | | |
Term loan | | $ | 2,503,352 | | $ | 2,807,298 | |
Obligation for purchase of technology license, net | | | 807,762 | | | - | |
Obligation for purchase of distributorship, as modified | | | - | | | 223,645 | |
| | | 3,311,114 | | | 3,030,943 | |
Less current maturities | | | 563,659 | | | 629,631 | |
Total long-term debt | | $ | 2,747,455 | | $ | 2,401,312 | |
| | | | | | | |
Revolving line of credit | | $ | 1,150,000 | | $ | - | |
| | | | | | | |
Total debt | | $ | 4,461,114 | | $ | 3,030,943 | |
Originating in September 2012 with its primary lender, the term loan is for a period of thirty-eight months with interest accruing at a floating interest rate based on the 30-day LIBOR plus 2%. At September 30, 2013, the term loan's interest rate was 2.1821%. Monthly principal and interest are based on approximately a seven-year amortization. The aggregate outstanding balance of principal and interest is due and payable on November 30, 2015. | |
| |
The Company also has an available $5 million revolving line of credit agreement with its primary lender. During the quarter ended September 30, 2013, the Company borrowed $1,150,000 under its revolver. The revolver's interest rate is a floating interest rate based on the 30-day LIBOR plus 1.85% and interest is payable monthly. At September 30, 2013, the revolver's interest rate was 2.0321%. In September 2013, the term of the Company's revolving line of credit agreement was extended to December 31, 2013 with unpaid borrowings, if any, due at that time. | |
| |
The term loan agreement and the revolving line of credit agreement are secured by all tangible and intangible assets of the Company and also by a mortgage on the real estate of the Company's headquarters. These agreements also include loan covenants requiring the Company to maintain net tangible worth of not less than $11 million, and that borrowings under the agreements shall not exceed EBITDA by a ratio of 2.5 to 1. At September 30, 2013, the Company was in compliance with its loan covenants. | |
| |
As described further in Note 9 of these consolidated financial statements, in connection with its July 2013 acquisition of a technology license, the Company incurred an obligation of $804,661 (net of original issue discount of $45,339). | |
| |
The Company's obligation for purchase of a distributorship required monthly payments of principal and interest of $37,500 which ended in June 2013. |
Note 6 | Long-Term Incentive Compensation Plan |
In July 2010, the Company’s Reliv Europe subsidiary entered into a long-term performance-based incentive compensation agreement with the subsidiary’s senior managers. The valuation of the compensation agreement is an EBITDA-based formula derived from the subsidiary’s financial performance and vests in 20% annual increments which began in April 2011. The amount of the incentive, if any, varies in accordance with a 24-month look-back of the subsidiary’s financial performance and the vesting provisions. Upon initial vesting, a manager may elect to exercise his/her put option to receive in cash some or all of his/her respective share of the incentive. Beginning April 2015, the Company may exercise a call option on one or more of the manager’s incentive amount; redeeming such amount in cash or a combination of cash and the Company’s common stock, depending upon the amount of the vested incentive. In the fourth quarter of 2012, the subsidiary’s 24-month financial performance became positive resulting in the recognition of compensation expense and a corresponding non-current liability of $88,500 in the Company’s 2012 consolidated financial statements. For the three months and nine months ended September 30, 2013, compensation expense associated with this incentive plan was $66,000 and $266,500, respectively, and is presented in Selling, General and Administrative in the accompanying condensed consolidated statements of net income and comprehensive income. |
7 | ||
| | Nine Months ended September 30 | | ||||
| | 2013 | | 2012 | | ||
| | | | | | | |
Income taxes at U.S. statutory rate | | $ | 206,000 | | $ | 504,000 | |
State income taxes, net of federal benefit | | | 60,000 | | | 81,000 | |
Higher/(lower) effective taxes on earnings in foreign countries | | | 77,000 | | | (20,000) | |
Foreign corporate income taxes | | | 30,000 | | | 35,000 | |
Other, net | | | (40,000) | | | (41,000) | |
| | | | | | | |
| | $ | 333,000 | | $ | 559,000 | |
One of the Company's foreign subsidiaries is presently under local country audit for alleged deficiencies (totaling approximately $800,000 plus interest at 20% per annum) in value-added tax (VAT) and withholding tax for the years 2004 through 2006. The Company, in consultation with its legal counsel, believes that there are strong legal grounds that it is not liable to pay the majority of the alleged tax deficiencies. As of December 31, 2010, management estimated and reserved approximately $185,000 in taxes and interest for resolution of this matter and recorded this amount within Selling, General, and Administrative expense in the 2010 Consolidated Statement of Income. In 2011, the Company made good faith deposits to the local tax authority under the tax agency's administrative judicial resolution process. As of September 30, 2013 and December 31, 2012, management's estimated reserve (net of deposits) for this matter is approximately $70,000. There has been no change in this matter during the first nine months of 2013. |
Note 8 | Note Receivable Due from Distributor |
In March 2012, the Company purchased from a real estate investment management firm a note and mortgage ("Note") on certain properties in Wyoming and Idaho for $2 million. In May 2012, the Company entered into a Loan Modification Agreement ("LMA") with the Note's original and present borrower ("Borrower") to restructure the Note's principal amount due and related terms. The LMA terms are for a principal balance due of $2 million with interest only payable monthly in 2012. The LMA's interest rate is the greater of 6% or prime and there is no prepayment penalty for voluntary principal payments. Concurrently, with the execution of of the LMA, the Company and the Borrower also entered into a Security Agreement in which repayment of the LMA is secured by the Borrower's Reliv distributorship business. |
As originally structured, beginning in 2013, the LMA was to require monthly payment of principal and interest under a five-year amortization period. In 2013, while a permanent restructuring of the LMA's repayment terms are being negotiated, management and the Borrower verbally agreed to a temporary LMA modification which, beginning February 2013, requires the Borrower to make monthly payments of principal and interest under a fifteen-year amortization period. The outstanding balance of the note receivable was $1,943,010 and $2,000,000 as of September 30, 2013 and December 31, 2012, respectively. |
8 | ||
Note 9 | Acquisition of Lunasin Technology License |
In July 2013, a newly-formed, wholly-owned subsidiary of the Company entered into a Technology License Agreement (TLA) with a privately-held company. The TLA provides the Company the exclusive license for certain intellectual property related to the nutritional ingredient lunasin and other soy-related peptides and proteins. In consideration for the TLA, the Company agreed to pay the licensor a purchase price of $2 million; $1.15 million paid at closing, with the remaining obligation (non-interest bearing) paid over the next four years in a series of annual payments ranging from $150,000 to $250,000 as stated in the agreement. Subject to certain minimum and maximum volume thresholds, the Company may also pay the licensor royalties of 5% of sales during the first five years of the TLA and royalties ranging from 1% to 3% of sales during the remaining life of the TLA. The transaction closed on July 23, 2013, and was funded by a borrowing of $1.15 million from the company’s revolving loan agreement. The Company has accounted for the TLA as an asset purchase acquisition consisting of a long-term finite-lived asset to be amortized over the life of the associated intellectual property (approximately seventeen years). |
| | Gross Carrying Amount | | Accumulated Amortization | | ||||||||
| | September 30 | | December 31 | | September 30 | | December 31 | | ||||
Intangible Assets | | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | | | | | | | | | | | | |
Distributorship and related agreements | | $ | 2,060,000 | | $ | 2,060,000 | | $ | 731,872 | | $ | 616,365 | |
Lunasin technology license | | | 1,954,661 | | | - | | | 19,353 | | | - | |
| | | | | | | | | | | | | |
| | $ | 4,014,661 | | $ | 2,060,000 | | $ | 751,225 | | $ | 616,365 | |
| | Intangible | |
| | Amorization | |
Fiscal year ending December 31: | | | |
2014 | | $ | 270,000 |
2015 | | | 270,000 |
2016 | | | 255,000 |
2017 | | | 226,000 |
2018 | | | 226,000 |
9 | ||
10 | ||
| | Three months ended September 30, | | Nine months ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | | | | | | | | | | | | |
Net sales | | | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |
Costs and expenses: | | | | | | | | | | | | | |
Cost of products sold | | | 21.4 | | | 20.0 | | | 20.6 | | | 19.6 | |
Distributor royalties and commissions | | | 36.1 | | | 37.6 | | | 36.6 | | | 37.7 | |
Selling, general and administrative | | | 40.1 | | | 42.6 | | | 41.6 | | | 40.6 | |
| | | | | | | | | | | | | |
Income (loss) from operations | | | 2.4 | | | (0.2) | | | 1.2 | | | 2.1 | |
Interest expense | | | (0.1) | | | (0.1) | | | (0.1) | | | (0.2) | |
Interest and other income | | | 0.4 | | | 3.1 | | | 0.1 | | | 1.0 | |
| | | | | | | | | | | | | |
Income before income taxes | | | 2.7 | | | 2.8 | | | 1.2 | | | 2.9 | |
Provision for income taxes | | | 0.9 | | | 0.9 | | | 0.7 | | | 1.1 | |
| | | | | | | | | | | | | |
Net income | | | 1.8 | % | | 1.9 | % | | 0.5 | % | | 1.8 | % |
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| | Three months ended September 30, | | | | | | | | | ||||||||||
| | 2013 | | 2012 | | Change from prior year | | | ||||||||||||
| | Amount | | % of Net Sales | | Amount | | % of Net Sales | | Amount | | % | | | ||||||
| | (dollars in thousands) | | | | | | | | | ||||||||||
United States | | $ | 13,163 | | | 79.6 | % | $ | 12,073 | | | 79.0 | % | $ | 1,090 | | | 9.0 | % | |
Australia/New Zealand | | | 429 | | | 2.6 | | | 462 | | | 3.0 | | | (33) | | | (7.1) | | |
Canada | | | 384 | | | 2.3 | | | 381 | | | 2.5 | | | 3 | | | 0.8 | | |
Mexico | | | 225 | | | 1.4 | | | 274 | | | 1.8 | | | (49) | | | (17.9) | | |
Europe | | | 1,685 | | | 10.2 | | | 1,389 | | | 9.1 | | | 296 | | | 21.3 | | |
Asia | | | 653 | | | 3.9 | | | 698 | | | 4.6 | | | (45) | | | (6.4) | | |
Consolidated total | | $ | 16,539 | | | 100.0 | % | $ | 15,277 | | | 100.0 | % | $ | 1,262 | | | 8.3 | % | |
| | Nine months ended September 30, | | | | | | | | | ||||||||||
| | 2013 | | 2012 | | Change from prior year | | | ||||||||||||
| | Amount | | % of Net Sales | | Amount | | % of Net Sales | | Amount | | % | | | ||||||
| | (dollars in thousands) | | | | | | | | | ||||||||||
United States | | $ | 40,101 | | | 78.9 | % | $ | 40,786 | | | 78.7 | % | $ | (685) | | | (1.7) | % | |
Australia/New Zealand | | | 1,402 | | | 2.8 | | | 1,482 | | | 2.9 | | | (80) | | | (5.4) | | |
Canada | | | 1,310 | | | 2.6 | | | 1,370 | | | 2.7 | | | (60) | | | (4.4) | | |
Mexico | | | 759 | | | 1.5 | | | 832 | | | 1.6 | | | (73) | | | (8.8) | | |
Europe | | | 5,664 | | | 11.1 | | | 4,724 | | | 9.1 | | | 940 | | | 19.9 | | |
Asia | | | 1,586 | | | 3.1 | | | 2,607 | | | 5.0 | | | (1,021) | | | (39.2) | | |
Consolidated total | | $ | 50,822 | | | 100.0 | % | $ | 51,801 | | | 100.0 | % | $ | (979 ) | | | (1.9) | % | |
| | September 30, 2013 | | September 30, 2012 | | % Change | | ||||||||||||
| | Total Active Distributors | | Master Affiliates and Above | | Total Active Distributors | | Master Affiliates and Above | | Total Active Distributors | | Master Affiliates and Above | | ||||||
United States | | | 38,670 | | | 4,830 | | | 41,300 | | | 4,990 | | | (6.4) | % | | (3.2) | % |
Australia/New Zealand | | | 1,470 | | | 200 | | | 1,910 | | | 150 | | | (23.0) | | | 33.3 | |
Canada | | | 1,270 | | | 220 | | | 1,270 | | | 210 | | | 0.0 | | | 4.8 | |
Mexico | | | 1,080 | | | 150 | | | 1,810 | | | 150 | | | (40.3) | | | 0.0 | |
Europe | | | 5,800 | | | 820 | | | 6,440 | | | 650 | | | (9.9) | | | 26.2 | |
Asia | | | 3,630 | | | 450 | | | 5,840 | | | 560 | | | (37.8) | | | (19.6) | |
Consolidated total | | | 51,920 | | | 6,670 | | | 58,570 | | | 6,710 | | | (11.4) | % | | (0.6) | % |
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RELIV’ INTERNATIONAL, INC. | | | |
| | | |
| | | |
By: | /s/ Robert L. Montgomery | | |
| Robert L. Montgomery, Chairman of the Board of Directors and Chief Executive Officer | ||
| | | |
Date: November 14, 2013 | | | |
| | | |
| | | |
By: | /s/ Steven D. Albright | | |
| Steven D. Albright, Chief Financial Officer (and accounting officer) | ||
| | | |
Date: November 14, 2013 | | |
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