RELIV INTERNATIONAL INC (Form: 10-Q, Received: 11/14/2016 10:27:13)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to_________

Commission File Number

000-19932

RELIV’ INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

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)

(636) 537-9715

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company þ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The number of shares outstanding of the Registrant’s common stock as of November 2, 2016 was 1,845,587 (excluding treasury shares).

INDEX

Part I – Financial Information

Item No. 1	Financial Statements (Unaudited)	2
Item No. 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item No. 4	Controls and Procedures	20

Part II – Other Information

Item No. 6	Exhibits	21

PART I — FINANCIAL INFORMATION

Item No. 1 - Financial Statements

Reliv International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	September 30		December 31
	2016		2015
	(unaudited)
Assets

Current assets:
Cash and cash equivalents	$	3,170,008	$	3,262,263
Accounts receivable, less allowances of $29,300 in 2016 and $30,200 in 2015		6,562		89,376
Accounts and note due from employees and distributors		139,671		134,668
Inventories
Finished goods		2,675,895		3,657,612
Raw materials		1,398,963		1,382,635
Sales aids and promotional materials		146,523		132,475
Total inventories		4,221,381		5,172,722

Refundable income taxes		524,329		522,035
Prepaid expenses and other current assets		616,556		552,645
Deferred income taxes		-		66,000
Total current assets		8,678,507		9,799,709

Other assets		289,793		285,153
Cash surrender value of life insurance		2,935,963		2,848,232
Note receivable due from distributor		1,548,911		1,630,164
Deferred income taxes		500,000		623,000
Intangible assets, net		2,456,729		2,655,647

Property, plant and equipment:
Land and land improvements		905,190		905,190
Building		9,947,269		9,951,555
Machinery & equipment		4,329,392		4,344,403
Office equipment		1,205,690		1,223,921
Computer equipment & software		2,330,942		2,341,149
		18,718,483		18,766,218
Less: Accumulated depreciation		12,822,819		12,347,091
Net property, plant and equipment		5,895,664		6,419,127

Total assets	$	22,305,567	$	24,261,032

See notes to financial statements.

Reliv International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	September 30			December 31
	2016			2015
	(unaudited)
Liabilities and stockholders' equity

Current liabilities:
Accounts payable and accrued expenses:
Trade accounts payable and other accrued expenses	$	2,227,978		$	1,859,716
Distributors' commissions payable		1,448,035			1,567,883
Sales taxes payable		202,819			232,996
Payroll and payroll taxes payable		277,664			277,157
Total accounts payable and accrued expenses		4,156,496			3,937,752

Current portion of long-term debt		426,035			781,505
Total current liabilities		4,582,531			4,719,257

Noncurrent liabilities:
Long-term debt, less current portion		2,599,581			3,159,575
Deferred income taxes		-			94,000
Other noncurrent liabilities		382,340			405,705
Total noncurrent liabilities		2,981,921			3,659,280

Stockholders' equity:
Preferred stock, par value $.001 per share; 3,000,000 shares authorized; -0- shares issued and outstanding in 2016 and 2015		-			-
Common stock, par value $.001 per share; 30,000,000 authorized; 2,110,440 shares issued and 1,845,587 shares outstanding as of 9/30/2016; 2,110,440 shares issued and 1,845,587 shares outstanding as of 12/31/2015		14,773			14,773
Additional paid-in capital		30,551,899			30,499,817
Accumulated deficit		(9,556,608	)		(8,659,262	)
Accumulated other comprehensive loss:
Foreign currency translation adjustment		(930,389	)		(634,273	)
Treasury stock		(5,338,560	)		(5,338,560	)

Total stockholders' equity		14,741,115			15,882,495

Total liabilities and stockholders' equity	$	22,305,567		$	24,261,032

See notes to financial statements.

Reliv International, Inc. and Subsidiaries

Condensed Consolidated Statements of Net

Income (Loss) and Comprehensive Income (Loss)

(unaudited)	Three months ended September 30						Nine months ended September 30
	2016			2015			2016			2015

Product sales	$	9,972,547		$	11,250,271		$	32,181,585		$	36,401,384
Handling & freight income		812,868			944,182			2,693,602			3,072,783

Net sales		10,785,415			12,194,453			34,875,187			39,474,167

Costs and expenses:
Cost of products sold		2,214,633			2,603,167			7,729,508			8,245,871
Distributor royalties and commissions		3,799,791			4,308,647			12,345,171			14,048,971
Selling, general and administrative		4,737,305			5,659,989			15,887,901			18,244,930

Total costs and expenses		10,751,729			12,571,803			35,962,580			40,539,772

Income (loss) from operations		33,686			(377,350	)		(1,087,393	)		(1,065,605	)

Other income (expense):
Interest income		26,199			28,536			80,689			88,991
Interest expense		(28,982	)		(36,814	)		(82,161	)		(87,502	)
Other income / (expense)		41,575			(72,373	)		226,519			(227,434	)

Income (loss) before income taxes		72,478			(458,001	)		(862,346	)		(1,291,550	)
Provision (benefit) for income taxes		(62,000	)		(169,000	)		35,000			(273,000	)

Net income (loss)	$	134,478		$	(289,001	)	$	(897,346	)	$	(1,018,550	)

Other comprehensive income (loss):
Foreign currency translation adjustment		(74,503	)		(72,673	)		(296,116	)		(23,734	)

Comprehensive income (loss)	$	59,975		$	(361,674	)	$	(1,193,462	)	$	(1,042,284	)

Earnings (loss) per common share - Basic	$	0.07		$	(0.16	)	$	(0.49	)	$	(0.55	)
Weighted average shares		1,846,000			1,846,000			1,846,000			1,836,000

Earnings (loss) per common share - Diluted	$	0.07		$	(0.16	)	$	(0.49	)	$	(0.55	)
Weighted average shares		1,846,000			1,846,000			1,846,000			1,836,000

See notes to financial statements.

Reliv International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Nine months ended September 30
	2016			2015

Operating activities:
Net loss	$	(897,346	)	$	(1,018,550	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		734,763			758,564
Stock-based compensation		52,083			45,981
Non-cash life insurance policy accretion		(87,732	)		(75,216	)
Deferred income taxes		27,000			(89,000	)
Foreign currency transaction (gain)/loss		(191,091	)		98,172
(Increase) decrease in accounts receivable and accounts due from employees and distributors		81,571			163,256
(Increase) decrease in inventories		868,287			(585,634	)
(Increase) decrease in refundable income taxes		(2,153	)		(214,378	)
(Increase) decrease in prepaid expenses and other current assets		(71,431	)		(123,423	)
(Increase) decrease in other assets		(4,180	)		23,247
Increase (decrease) in accounts payable & accrued expenses and other noncurrent liabilities		253,012			(86,860	)

Net cash provided by (used in) operating activities		762,783			(1,103,841	)

Investing activities:
Proceeds from the sale of property, plant and equipment		912			7,181
Purchase of property, plant and equipment		(18,686	)		(224,719	)
Payments received on distributor note receivable		76,534			72,088

Net cash provided by (used in) investing activities		58,760			(145,450	)

Financing activities:
Repayment of line of credit borrowings		-			(500,000	)
Proceeds from term loan borrowings		-			3,249,501
Principal payments on long-term borrowings		(904,461	)		(3,334,552	)

Net cash used in financing activities		(904,461	)		(585,051	)

Effect of exchange rate changes on cash and cash equivalents		(9,337	)		3,915

Increase (decrease) in cash and cash equivalents		(92,255	)		(1,830,427	)

Cash and cash equivalents at beginning of period		3,262,263			4,989,392

Cash and cash equivalents at end of period	$	3,170,008		$	3,158,965

Supplementary disclosure of cash flow information:
Noncash financing transactions (Note 5):
Issuance of promissory notes	$	-		$	424,000

Issuance of company common stock	$	-		$	117,000

See notes to financial statements.

Reliv International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

September 30, 2016

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, 2015, filed March 24, 2016 with the Securities and Exchange Commission.

On October 4, 2016, the Company effected a 1-for-7 reverse stock split of the Company's common stock. Each stockholder's percentage ownership and proportional voting power remained unchanged as a result of the reverse stock split. All applicable share data, per share amounts, and related information in these Condensed Consolidated Financial Statements and notes thereto have been adjusted retroactively to give effect to the 1-for-7 reverse stock split.

Note 2—

Basic and Diluted Earnings (Loss) per Share

Basic earnings (loss) per common share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is 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 (loss) per share:

	Three months ended September 30					Nine months ended September 30
	2016		2015			2016			2015
Numerator:
Net income (loss)	$	134,478	$	(289,001	)	$	(897,346	)	$	(1,018,550	)

Denominator:
Denominator for basic earnings (loss) per share—weighted average shares		1,846,000		1,846,000			1,846,000			1,836,000
Dilutive effect of employee stock options and other warrants		-		-			-			-

Denominator for diluted earnings (loss) per share—adjusted weighted average shares		1,846,000		1,846,000			1,846,000			1,836,000

Basic earnings (loss) per share	$	0.07	$	(0.16	)	$	(0.49	)	$	(0.55	)
Diluted earnings (loss) per share	$	0.07	$	(0.16	)	$	(0.49	)	$	(0.55	)

Options and warrants to purchase 265,001 and 267,184 shares of common stock for the three months and nine months ended September 30, 2016, respectively, were not included in the denominator for diluted earnings (loss) per share because their effect would be antidilutive or because the shares were deemed contingently issuable. Options and warrants to purchase 270,958 shares of common stock for the three months and nine months ended September 30, 2015, respectively, were not included in the denominator for diluted earnings (loss) per share because their effect would be antidilutive or because the shares were deemed contingently issuable.

Reliv International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

September 30, 2016

Note 3—

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, 2016

Long-term debt	$	3,025,616	$	3,025,616		-	$	3,025,616		-
Note receivable		1,656,449		1,900,000		-		1,900,000		-
Marketable securities		264,000		264,000	$	264,000		-		-

December 31, 2015

Long-term debt	$	3,941,080	$	3,941,080		-	$	3,941,080		-
Note receivable		1,732,982		1,942,000		-		1,942,000		-
Marketable securities		275,000		275,000	$	275,000		-		-

Long-term debt : The fair value of the Company's term and revolver loans approximate carrying value as these loans were incurred within the past twelve months and have variable market-based interest rates which reset every thirty days. The fair value of the Company's obligation for the acquisition of its lunasin technology license approximates carrying value as this obligation is a zero-interest based obligation discounted utilizing an interest rate factor comparable to the Company's market-based interest rate for its term and revolver loans. The fair value of the Company's notes payable obligations approximates carrying value as these obligations were incurred within the past eighteen months and have variable market-based interest rates which reset every ninety days.

Note receivable : The Company's note receivable is a variable rate residential mortgage-based financial instrument. An average of published interest rate quotes for a fifteen-year residential jumbo mortgage, a comparable financial instrument, was used to estimate fair value of this note receivable under a discounted cash flow model.

Marketable securities : The assets (trading securities) of the Company's Supplemental Executive Retirement Plan are recorded at fair value on a recurring basis, and are presented within Other Assets in the consolidated balance sheets.

The carrying value of other financial instruments, including cash, accounts receivable and accounts payable, and accrued liabilities approximate fair value due to their short maturities or variable-rate nature of their respective balances.

Reliv International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

September 30, 2016

Note 4—

Taxes

The interim financial statement provision (benefit) for income taxes is different from the amounts computed by applying the United States federal statutory income tax rate of 34%. In summary, the reasons for these differences are as follows:

	Nine months ended September 30
	2016			2015

Income taxes (benefit) at U.S. statutory rate	$	(293,000	)	$	(439,000	)
State income taxes, net of federal benefit		20,000			36,000
Higher / (lower) effective taxes on earnings/losses in certain foreign countries		(50,000	)		39,000
Foreign corporate income taxes		66,000			32,000
Change in valuation allowance		363,000			-
Other, net		(71,000	)		59,000

	$	35,000		$	(273,000	)

During the second quarter of 2016 (and affirmed in the third quarter of 2016), the Company determined that it was more likely than not that federal and various state net operating losses it expects to generate in 2016 will not be realized based on projections of future taxable income, estimated reversals of existing taxable timing differences, and other considerations. Accordingly, the income tax provision for the nine months ended September 30, 2016 includes the impact of recording a total valuation allowance of $363,000 in the second and third quarters of 2016 against the losses generated from a U.S. tax perspective.

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, 2016 and December 31, 2015, management's estimated reserve (net of deposits) for this matter is approximately $156,000 and $142,000, respectively. There has been no change in this matter during the first nine months of 2016.

Note 5—

Long-Term Incentive Compensation Plan — 2015

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 was an EBITDA-based formula derived from the subsidiary’s financial performance and vested in 20% annual increments which began in April 2011. The amount of the incentive, if any, increased or decreased each quarter in accordance with a 24-month look-back of the subsidiary’s financial performance and the vesting provisions. For the three months and nine months ended September 30, 2015, compensation expense associated with this incentive plan was $-0- and $90,800, respectively. This compensation expense is presented in Selling, General and Administrative in the accompanying condensed consolidated statements of net income (loss) and comprehensive income (loss).

During the second quarter of 2015, the cumulative incentive amount of $756,800 became 100% vested, and concurrently, each of the subsidiary's senior managers exercised 100% of his/her put option. In the aggregate, the Company and the managers agreed to settle the incentive obligation whereby the Company: issued notes payable of approximately $424,000 in April 2015, issued 100,000 shares of Company common stock (fair value at settlement of $117,000) in July 2015, and made cash payments of approximately $216,000 in July 2015.

The notes payable issued by the Company to the managers range in length from one to two years with quarterly payments of principal and interest beginning July 2015 and ending April 2017. The notes accrue interest at a floating interest rate based on the three-month pound LIBOR rate plus 3%. At September 30, 2016, the outstanding balance of the notes was approximately $101,000 and the interest rate was 3.49%.

Reliv International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

September 30, 2016

Note 6—

Debt

	September 30		December 31
	2016		2015

Term loan	$	2,924,541	$	3,168,261
Notes payable		101,075		283,455
Obligation for acquisition of technology license, net		-		489,364
		3,025,616		3,941,080
Less current portion		426,035		781,505
Total long-term debt	$	2,599,581	$	3,159,575

Estimated maturities of debt at September 30, 2016 are as follows:

Twelve months ending September 30,
2017	$	426,035
2018		2,599,581
	$	3,025,616

Term loan and revolving line agreements

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

The $3.25 million term loan is for a period of three years and requires 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. The term loan's interest rate is based on the 30-day LIBOR plus 2.25% and was 2.744% at September 30, 2016.

The $3.5 million revolving line of credit agreement, 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. As of September 30, 2016, there were no outstanding borrowings on the revolving line of credit.

Borrowings under the lending agreements are 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, and by a mortgage on the real estate of the Company’s headquarters.

The original September 30, 2015 lending agreements include a quarterly covenant requiring the Company to maintain net tangible worth of not less than $9.5 million. The September 30, 2016 revolving line of credit agreement extension adds a quarterly financial covenant under which the Company will have: i) a quarterly minimum requirement of earnings before interest expense, income tax expense, depreciation, and amortization ("EBITDA") of $200,000 for the quarter ended December 31, 2016; ii) a cumulative minimum EBITDA requirement of $200,000, $400,000, $600,000, and $800,000 for the fiscal periods ending March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017, respectively; and iii) a minimum EBITDA of $200,000 for the quarter ended March 31, 2018.

As defined, EBITDA means 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 September 30, 2016, the Company was in compliance with its loan covenant requirements.

Reliv International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

September 30, 2016

Note 6—

Debt (continued)

Obligation for Acquisition of Technology License, net

In July 2013, 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 peptins and proteins. In consideration for the TLA, the Company agreed to pay the licensor a purchase price of $2 million; $1.15 million paid in July 2013, with the remaining obligation paid over the next four years in a series of annual payments ranging from $150,000 to $250,000. Subject to certain minimum and maximum product sales thresholds, the Company may also have been required to pay the licensor royalties during the remaining life of the intellectual properties (approximately seventeen years at origination). During the third quarter of 2016, the Company made a scheduled $250,000 payment on this obligation. In addition, during the third quarter of 2016, the Company and licensor entered into a letter agreement pursuant to which the Company paid licensor the final $250,000 payment, due in July 2017 per the original agreement. In consideration for acceleration of the final payment, the licensor transferred all rights, title and interest in the technology to the Company and terminated any future royalty obligations on the part of the Company.

Notes Payable

A description of the notes payable is presented in Note 5 — Long-Term Incentive Compensation Plan.

Note 7—

Recent Accounting Standards Pending Adoption

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing U.S. GAAP revenue recognition guidance and becomes effective for the Company on January 1, 2018. The new standard permits the use of either the retrospective or modified retrospective transition method. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures, as well as its planned transition method.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires all deferred income tax assets and liabilities to be classified as non-current on the balance sheet, rather than being separated into current and non-current amounts. The new standard is effective for annual reporting periods beginning after December 31, 2016 with early adoption permitted. The Company is currently evaluating the effect that the new standard will have on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern , which requires management to assess, at each annual and interim reporting period, the entity's ability to continue as a going concern within one year from the date the financial statements are issued and provide related disclosures. The new standard will be effective for the Company for the annual reporting period ending December 31, 2016, with early adoption permitted. This standard is not currently expected to have a material effect on the Company's financial statement disclosures upon adoption, though the ultimate impact will be dependent on the Company's financial condition and expected operating outlook at such time.

In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842) which supercedes the existing lease guidance. This update requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than twelve months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. Upon adoption, the Company will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This update is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with earlier application permitted. The Company is evaluating the effects that the new standard will have on its consolidated financial statements and related disclosures.

Reliv International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

September 30, 2016

Note 7—

Recent Accounting Standards Pending Adoption (continued)

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This amendment is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, forfeitures, and classification on the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, with earlier application permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

Note 8—

Restructuring Activities

In May 2016, the Company implemented an employee headcount cost reduction program resulting in the reduction of approximately 9% of the Company's worldwide employees. The total cost of this program, representing severance and benefits, was approximately $275,000, and was included in the company's operating results for the quarter ended June 30, 2016. The aggregate annual salaries of the affected employees was approximately $1,100,000.

At September 30, 2016, there was no remaining reserve for severance and benefits under this program.

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 78.0% of worldwide net sales for the nine months ended September 30, 2016 and 78.1% of worldwide net sales for the nine months ended September 30, 2015. 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 September 30, 2016, consisted of approximately 40,450 distributors. 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 20% 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 ranges from 50% to 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 11.6% in the three months ended September 30, 2016 compared to the same period in 2015. During the third quarter of 2016 (“Q3 2016”), sales in the United States decreased by 12.1%, and international sales decreased by 9.5% over the prior-year period. International sales, when reported in U.S. dollars, were negatively impacted by a stronger U.S. dollar versus all of the currencies of the markets where we do business. Excluding the impact of currency exchange fluctuation, international sales increased by 0.2%.

For the nine-month period ended September 30, 2016 (“YTD 2016”), net sales decreased by 11.7% compared to the same period in 2015. For YTD 2016, sales in the United States decreased by 11.8%, and international sales decreased by 11.1% compared to the prior-year period. Excluding the impact of currency exchange fluctuation, international sales decreased by 3.8%.

The following table summarizes net sales by geographic market for the three months ended September 30, 2016 and 2015.

	Three months ended September 30,
	2016					2015					Change from prior year
	Amount		% of Net Sales			Amount		% of Net Sales			Amount			%
	(dollars in thousands)
United States	$	8,581		79.6	%	$	9,759		80.0	%	$	(1,178	)		(12.1	)%
Australia/New Zealand		242		2.2			283		2.3			(41	)		(14.5	)
Canada		250		2.3			260		2.2			(10	)		(3.8	)
Mexico		119		1.1			136		1.1			(17	)		(12.5	)
Europe		1,166		10.8			1,304		10.7			(138	)		(10.6	)
Asia		427		4.0			452		3.7			(25	)		(5.5	)
Consolidated total	$	10,785		100.0	%	$	12,194		100.0	%	$	(1,409	)		(11.6	)%

The following table summarizes net sales by geographic market for the nine months ended September 30, 2016 and 2015.

	Nine months ended September 30,
	2016					2015					Change from prior year
	Amount		% of Net Sales			Amount		% of Net Sales			Amount			%
	(dollars in thousands)
United States	$	27,191		78.0	%	$	30,831		78.1	%	$	(3,640	)		(11.8	)%
Australia/New Zealand		825		2.4			984		2.5			(159	)		(16.2	)
Canada		799		2.3			1,028		2.6			(229	)		(22.3	)
Mexico		419		1.2			567		1.4			(148	)		(26.1	)
Europe		4,344		12.4			4,651		11.8			(307	)		(6.6	)
Asia		1,297		3.7			1,413		3.6			(116	)		(8.2	)
Consolidated total	$	34,875		100.0	%	$	39,474		100.0	%	$	(4,599	)		(11.7	)%

The following table sets forth, as of September 30, 2016 and 2015, 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. In February 2016, we introduced a formal Preferred Customer program in the United States and Canada. As a result, we are including Preferred Customers as part of our Active Distributor count. Preferred Customer programs were previously in place in Europe and other foreign markets. Preferred Customers represent approximately 4,720 and 4,390 of the Active Distributor count as of September 30, 2016 and 2015, respectively. The significant majority of these Preferred Customers are in Europe.

	September 30, 2016				September 30, 2015				% 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		28,700		4,110		33,400		4,500		(14.1	)%		(8.7	)%
Australia/New Zealand		1,580		130		1,790		130		(11.7	)		—
Canada		890		140		1,250		230		(28.8	)		(39.1	)
Mexico		1,010		90		1,240		100		(18.5	)		(10.0	)
Europe		5,230		520		6,390		630		(18.2	)		(17.5	)
Asia		3,040		330		3,100		300		(1.9	)		10.0
Consolidated total		40,450		5,320		47,170		5,890		(14.2	)%		(9.7	)%

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 United States 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.

The following table provides key statistics related to distributor activity by market and should be read in conjunction with the following discussion. Adjusted results should be considered only in conjunction with results reported according to accounting principles generally accepted in the United States.

Distributor Activity by Market																			International
	United States			AUS/NZ			Canada			Mexico			Europe			Asia			— Total
Three Months Ended 9/30/16
Sales in Q3 2016 in USD (in 000's)	$	8,581		$	242		$	250		$	119		$	1,166		$	427		$	2,204

% change in sales-Q3 2016 vs. Q3 2015:
change in GAAP sales in USD		-12.1	%		-14.5	%		-3.8	%		-12.5	%		-10.6	%		-5.5	%		-9.5	%
due to currency fluctuation		-			6.3	%		1.0	%		-12.1	%		-18.1	%		-0.8	%		-9.7	%
change in sales in local currency (non-GAAP)		-12.1	%		-20.8	%		-4.8	%		-0.4	%		7.5	%		-4.7	%		0.2	%

# of new distributors-Q3 2016 ⁽¹⁾		1,437			66			34			94			394			377			965
# of new distributors-Q3 2015		2,135			149			79			134			591			444			1,397
% change		-32.7	%		-55.7	%		-57.0	%		-29.9	%		-33.3	%		-15.1	%		-30.9	%

# of new Master Affiliates-Q3 2016		129			6			5			3			26			17			57
# of new Master Affiliates-Q3 2015		249			7			9			4			28			36			84
% change		-48.2	%		-14.3	%		-44.4	%		-25.0	%		-7.1	%		-52.8	%		-32.1	%

# of Product orders-Q3 2016		35,824			1,557			891			868			4,480			3,334			11,130
# of Product orders-Q3 2015		41,888			2,011			1,141			924			5,256			2,991			12,323
% change		-14.5	%		-22.6	%		-21.9	%		-6.1	%		-14.8	%		11.5	%		-9.7	%

																			Internationa l
	United States			AUS/NZ			Canada			Mexico			Europe			Asia			— Total
Nine Months Ended 9/30/16
Sales in YTD 2016 in USD (in 000's)	$	27,191		$	825		$	799		$	419		$	4,344		$	1,297		$	7,684

% change in sales-YTD 2016 vs. YTD 2015:
change in GAAP sales in USD		-11.8	%		-16.2	%		-22.3	%		-26.1	%		-6.6	%		-8.2	%		-11.1	%
due to currency fluctuation		-			-2.6	%		-3.9	%		-13.1	%		-9.4	%		-3.7	%		-7.3	%
change in sales in local currency (non-GAAP)		-11.8	%		-13.6	%		-18.4	%		-13.0	%		2.8	%		-4.5	%		-3.8	%

# of new distributors-YTD 2016 ⁽²⁾		4,442			266			111			321			1,639			1,240			3,577
# of new distributors-YTD 2015		6,495			422			341			515			2,499			1,206			4,983
% change		-31.6	%		-37.0	%		-67.4	%		-37.7	%		-34.4	%		2.8	%		-28.2	%

# of new Master Affiliates-YTD 2016		626			27			18			16			122			97			280
# of new Master Affiliates-YTD 2015		937			25			62			21			156			108			372
% change		-33.2	%		8.0	%		-71.0	%		-23.8	%		-21.8	%		-10.2	%		-24.7	%

# of Product orders-YTD 2016		110,871			5,253			2,827			2,863			16,304			9,064			36,311
# of Product orders-YTD 2015		128,602			6,117			3,892			3,162			18,195			8,496			39,862
% change		-13.8	%		-14.1	%		-27.4	%		-9.5	%		-10.4	%		6.7	%		-8.9	%

⁽¹⁾

The new distributor totals for Q3 2016 and Q3 2015 include 810 and 526, respectively, of new worldwide preferred customers.

⁽²⁾

The new distributor totals for YTD 2016 and YTD 2015 include 2,573 and 2,099, respectively, of new worldwide preferred customers.

United States

Net sales declined in the United States in Q3 2016 and for YTD 2016 compared to the prior-year periods. We believe this decrease is due in part to the changes made effective February 1, 2016 to our distributor compensation plan in the United States and Canada.

Effective February 1, 2016, we updated our distributor compensation plan to introduce a Preferred Customer program and to modify the requirements for a Retail Distributor (entry-level) to advance to the Affiliate distributor level. Advancement to Affiliate distributor entitles a distributor to a higher discount on their purchases and the opportunity to earn retail and wholesale profits. The updates to the distributor compensation plan also included adjustments to a distributor’s group business volume required to achieve the Master Affiliate level. We believe these changes enhance the value of the business opportunity to Master Affiliates and distributors at levels below Master Affiliate; however, we continue to train the distributor field to understand the benefit of these changes and to teach these concepts to their local distributor groups.

Flagship products in the LunaRich line, including Reliv Now® and LunaRich X™, constituted 17.7% and 15.6% of net sales in the United States, respectively, in Q3 2016 as our marketing continues to focus on these two products. Reliv NOW and LunaRich X represented 18.9% and 15.8%, respectively, of net sales in the United States in the prior-year quarter. For the nine months ended September 30, 2016, sales of Reliv Now and LunaRich X represented 18.0% and 15.3%, respectively, of net sales in the United States.

Distributor/preferred customer enrollments and new Master Affiliate qualifications decreased by 32.7% and 48.2%, respectively, in Q3 2016 compared to the prior year quarter in response to the changes to the new distributor enrollment process and the increased business volume requirements to reach the Master Affiliate level.

Distributor retention was 67.1% for the twelve month period ended September 30, 2016 compared to 71.1% for all of 2015. Distributor retention is determined by the percentage of active distributors from 2015 that renewed their distributorships in 2016.

Our average order size in Q3 2016 increased by 1.9% to $329 at suggested retail value compared to the prior-year quarter. However, the number of product orders decreased by 14.5% in Q3 2016 compared to the prior year quarter for the same reasons as the overall decrease in sales. For YTD 2016, our average order size increased by 1.5%; however, the number of product orders decreased by 13.8%.

International Operations

The average foreign exchange rate for the U.S. dollar for the first nine months of 2016 was stronger versus the various local currencies in which we conduct business when compared with the average exchange rates for the same period in 2015.

As a result of the stronger U.S. dollar, we have implemented price increases in all of our international markets. We are also reviewing sales by product to phase out products with lower sales levels and gross margins as strategically appropriate.

Net sales in Australia/New Zealand decreased by 20.8% in local currency in Q3 2016 compared to the prior-year quarter. We instituted price increases effective May 1, 2016, and new distributor/preferred customer enrollments decreased by 55.7% in Q3 2016.

Canadian net sales in Q3 2016 decreased by 4.8% in local currency compared to the prior-year quarter as a result of decreased distributor activity in the market. We implemented price increases effective April 1, 2016 in Canada.

Net sales in Mexico decreased by 0.4% in local currency in Q3 2016 compared to the prior-year quarter. We implemented price increases in this market on April 1, 2016, and distributor activity remains down as new distributor enrollments decreased by 29.9% in Q3 2016 compared to the prior-year quarter.

Net sales in Europe increased by 7.5% in local currency in Q3 2016 compared to the prior-year quarter. Sales have rebounded in Q3 2016 when compared to Q2 2016 subsequent to a price increase on May 1, 2016. However, we face declining margins subsequent to the drop in the value of the British pound after the Brexit vote on June 23, 2016.

Sales in Asia decreased by 4.7% in local currency in Q3 2016 compared to the prior-year quarter. New distributor/preferred customer enrollments decreased by 15.1% in Q3 2016 compared to the prior-year quarter.

Costs and Expenses

The following table sets forth selected results of our operations expressed as a percentage of net sales for the three- and nine-month periods ended September 30, 2016 and 2015. 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)	Three months ended
	September 30, 2016						September 30, 2015
	Amount			% of net sales			Amount			% of net sales

Net sales	$	10,785			100.0	%	$	12,194			100.0	%
Costs and expenses:
Cost of products sold		2,215			20.5			2,603			21.4
Distributor royalties and commissions		3,800			35.3			4,309			35.3
Selling, general and adminstrative		4,737			43.9			5,660			46.4

Income (loss) from operations		33			0.2			(378	)		(3.1	)
Interest income		26			0.2			29			0.2
Interest expense		(29	)		(0.3	)		(37	)		(0.3	)
Other income/(expense)		42			0.4			(72	)		(0.6	)

Income (loss) before income taxes		72			0.6			(458	)		(3.8	)
Provision (benefit) for income taxes		(62	)		(0.6	)		(169	)		(1.4	)

Net income (loss)	$	134			1.2	%	$	(289	)		(2.4	)%

Income (loss) per common share- ⁽¹⁾	$	0.07					$	(0.16	)
Basic and Diluted

	Nine months ended
	September 30, 2016						September 30, 2015
	Amount			% of net sales			Amount			% of net sales

Net sales	$	34,875			100.0	%	$	39,474			100.0	%
Costs and expenses:
Cost of products sold		7,729			22.2			8,246			20.9
Distributor royalties and commissions		12,345			35.4			14,049			35.6
Selling, general and adminstrative		15,888			45.5			18,245			46.2

Loss from operations		(1,087	)		(3.1	)		(1,066	)		(2.7	)
Interest income		81			0.2			89			0.2
Interest expense		(82	)		(0.2	)		(88	)		(0.2	)
Other income/(expense)		226			0.6			(227	)		(0.6	)

Loss before income taxes		(862	)		(2.5	)		(1,292	)		(3.3	)
Provision (benefit) for income taxes		35			0.1			(273	)		(0.7	)

Net loss	$	(897	)		(2.6	)%	$	(1,019	)		(2.6	)%

Income (loss) per common share- ⁽¹⁾	$	(0.49	)				$	(0.55	)
Basic and Diluted

⁽¹⁾ All per share amounts have been adjusted for the 1-for-7 reverse stock split effective on October 4, 2016.

Cost of Products Sold:

The cost of products sold as a percentage of net sales in Q3 2016 decreased compared to the prior-year quarter as the result of the workforce and cost reduction program implemented in May 2016. For the first nine months of 2016 (“YTD 2016”), the cost of products sold as a percentage of net sales increased compared to the prior-year period. For the YTD 2016 period, the cost of products sold was negatively impacted by lower plant utilization and higher quality control expenses.

Distributor Royalties and Commissions:

Distributor royalties and commissions as a percentage of net sales for Q3 2016 and YTD 2016 compared to the prior-year periods remained relatively steady. 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.

Selling, General and Administrative Expenses:

Selling, general and administrative expenses declined by $923,000 in Q3 2016 compared to the same period in 2015 and declined by $2.36 million in YTD 2016 compared to the prior-year period.

Salaries, salary-related expenses, and incentive compensation decreased in the aggregate by $967,000 in YTD 2016, compared to the prior-year period. Total compensation expense decreased as the result of continued headcount reductions in the United States through attrition and a worldwide workforce reduction that took place in May 2016. This headcount reduction program eliminated approximately 9 percent of the company's worldwide employees. The total cost of this program, representing severance and benefits, was approximately $275,000, and is included in the company's operating results for the YTD 2016 period. The aggregate annual salaries of the affected employees were approximately $1,100,000.

Other general and administrative expenses decreased by $523,000 in YTD 2016 vs. the prior-year period. This reduction was the result of both ongoing expense reductions, coupled with non-recurring expense items. Non-recurring expense items from the first nine months of 2015 (“YTD 2015”) include:

Compensation expense recognized as part of a long-term incentive agreement with our management team in our European subsidiary was $91,000 in YTD 2015. During Q2 2015, this long-term incentive agreement became 100% vested and the participants exercised their put option in the agreement. This incentive agreement is described in Note 5 of the Condensed Consolidated Financial Statements.

In Mexico, we recognized expense of approximately $130,000 during Q2 2015 related to the write-off of VAT credits and VAT paid on behalf of our distributors as part of an amnesty agreement related to the implementation of a new VAT arrangement in that country.

Significant ongoing expense reductions include:

Consulting, legal, and other professional fees decreased by $184,000 in YTD 2016 compared to the prior-year period.

Business insurance expenses decreased by $40,000.

Offsetting increases include:

Research & development expenses, along with other foreign product compliance requirements, increased by $165,000 in YTD 2016 compared to the prior-year period.

Sales and marketing expenses decreased by $806,000 in YTD 2016 versus the same period in 2015. Components of the decrease include:

$383,000 decrease in Star Director and other distributor bonuses, credit card fees, and other expenses related to the level of sales.

$190,000 decrease in distributor conferences and meeting expenses. Most of the decrease was the result of not holding regional conferences in the United States during Q1 2016.

$118,000 decrease in the cost of our promotional trips and other promotional incentives.

Other Income/Expense:

The other income in YTD 2016 is primarily the result of foreign currency exchange gains on intercompany debt denominated in U.S. dollars in certain of our subsidiaries. In YTD 2015, we recognized foreign currency exchange losses on the same intercompany debt.

Income Taxes/Benefit:

We reported an income tax expense of $35,000 for YTD 2016.

During the second quarter of 2016, we determined that it was more likely than not that Federal and various state net operating losses we expect to generate in 2016 will not be realized based on projections of future taxable income and other considerations. Accordingly, as of September 30, 2016, the tax provision for YTD 2016 includes the impact of recording a valuation allowance of $363,000 against the losses generated from a U.S. tax perspective.

See Note 4 of the Condensed Consolidated Financial Statements for additional detail regarding income taxes, including a reconciliation of the income tax expense/benefit to the U.S. statutory rate for each period.

Net Income/Loss:

For the third quarter of 2016, we had net income of $134,000, compared to a net loss of $289,000 in the prior-year quarter, as we began to realize the savings from the headcount and cost reduction program implemented during the second quarter of 2016. For the nine-month period of 2016, we continue to show a net loss, although smaller compared to the same period in 2015, as the result of the decline in net sales in the United States and other foreign markets, coupled with the valuation allowance recorded on the income tax benefit attributable to the YTD 2016 U.S. net loss.

Liquidity and Capital Resources

During the first nine months of 2016, we generated $763,000 of net cash in operating activities, $59,000 was provided by investing activities, and we used $904,000 in financing activities. This compares to $1.10 million used in operating activities, $145,000 used in investing activities, and $585,000 used in financing activities in the same period of 2015. Cash and cash equivalents decreased by $92,000 to $3.17 million as of September 30, 2016 compared to $3.26 million as of December 31, 2015 and $3.16 million as of September 30, 2015.

Significant changes in working capital items consisted of a decrease in inventory of $868,000, and an increase in accounts payable and accrued expenses of $253,000 in the first nine months of 2016. The decrease in inventory is the result of planned decreases in our inventory levels relative to sales, and the increase in accounts payable and accrued expenses is partially related to a financing arrangement for our annual corporate insurance policy renewals.

Investing activities during the first nine months of 2016 consisted of $18,000 for net capital expenditures, offset by payments received on a distributor note receivable of $77,000. Financing activities during the first nine months of 2016 consisted of principal payments of $904,000 on long-term borrowings, including an accelerated final principal payment of $250,000 due under a Technology License Agreement entered into in 2013. See Note 6 to the Condensed Consolidated Financial Statements for a further description.

Stockholders’ equity decreased to $14.7 million at September 30, 2016 compared to $15.9 million at December 31, 2015. The decrease is due to our net loss during the first nine months of 2016 of $897,000 coupled with an unfavorable adjustment in foreign currency translation of $296,000. Our working capital balance was $4.10 million at September 30, 2016 compared to $5.08 million at December 31, 2015. The current ratio at September 30, 2016 was 1.89 compared to 2.08 at December 31, 2015.

On September 30, 2015, we entered into series of agreements with a new 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 our former primary lender.

The proceeds from the new $3.25 million term loan were used to pay off the outstanding term loan and revolving line of credit balances, plus accrued interest, due under loan agreements with our former primary lender. Borrowings under the new lending agreements are secured by all our tangible and intangible assets, a whole life insurance policy on the life of our Chief Executive Officer, and by a mortgage on the real estate of our headquarters.

The $3.5 million revolving line of credit agreement accrues interest at a floating interest rate based on the 30-day LIBOR plus 2.25% and was renewed on September 30, 2016, with a new maturity date of April 30, 2018. As of September 30, 2016, there were no outstanding borrowings on the revolving line of credit.

The original September 30, 2015 lending agreements include a quarterly covenant requiring us to maintain net tangible worth of not less than $9.5 million. The September 30, 2016 revolving line of credit agreement extension adds a quarterly financial covenant under which we will have: i) a quarterly minimum requirement of earnings before interest expense, income tax expense, depreciation, and amortization ("EBITDA") of $200,000 for the quarter ended December 31, 2016; ii) a cumulative minimum EBITDA requirement of $200,000, $400,000, $600,000, and $800,000 for the fiscal periods ending March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017, respectively; and iii) a minimum EBITDA of $200,000 for the quarter ended March 31, 2018.

As defined, EBITDA means our 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 September 30, 2016, we were in compliance with all applicable covenants.

Management believes that our cash on hand, internally generated funds, and revolving line of credit extension will be sufficient to meet working capital requirements and our debt service requirements for the next twelve months.

Critical Accounting Policies

A summary of our critical accounting policies and estimates is presented on pages 26-27 of our 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 24, 2016. Our critical accounting policies remain unchanged as of September 30, 2016.

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 September 30, 2016. 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 September 30, 2016, 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 third quarter of 2016 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		First Amendment to Loan Agreement dated September 30, 2016 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 (revolving credit facility) dated September 30, 2016 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 September 30, 2016, 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 (filed herewith).

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: November 14, 2016

By:	/s/ Steven D. Albright
	Steven D. Albright, Chief Financial Officer (and accounting officer)

Date: November 14, 2016

Exhibit 10.1

FIRST AMENDMENT TO LOAN AGREEMENT

Principal	Loan Date	Maturity	Loan No	Call / Coll	Account	Officer	Initials
$3,500,000.00	09-30-2016	04-30-2018	8197223	UG		*******

References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

Borrower:

RELIV' INTERNATIONAL, INC.; RELIV', INC.; RELIV' WORLD CORPORATION; and SL Technology, Inc.

136 Chesterfield Industrial Boulevard

Chesterfield, MO 63005

Lender:

Enterprise Bank & Trust

St. Peters

300 St. Peters Centre Boulevard

St. Peters, MO 63376

This First Amendment to Business Loan Agreement ("Amendment") dated September 30, 2016, references and amends a certain Business Loan Agreement dated as of September 30, 2015 ("Loan Agreement") between Enterprise Bank & Trust ("Lender") and RELIV INTERNATIONAL,INC.,RELIV', INC., RELIV' WORLD CORPORATION, and SL Technology, Inc. ("Borrower").

RECITALS

A. Lender and Borrower have previously entered into the above referenced Loan Agreement.

B. Lender and Borrower wish to modify and amend the terms and conditions of the Loan Agreement, as hereinafter provided.

NOW THEREFORE, in consideration of the covenants and mutual agreements of the parties contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

This Amendment to Loan Agreement shall add the following:

Minimum EBITDA. Borrower shall have a Minimum EBITDA of not less than $200,000.00 on 12/31/2016 with a trailing three months then, Borrower shall have a Minimum EBITDA of not less than $200,000.00 on 3/31/2017 with a trailing three months then, Borrower shall have a Minimum EBITDA of not less than $400.000.00 on 6/30/2017 with a trailing six months then, Borrower shall have a Minimum EBITDA of not less than $600,000.00 on 9/30/2017 with a trailing nine months then, Borrower shall have a Minimum EBITDA of not less than $800,000.00 on 12/31/2017 with a trailing twelve months then, Borrower shall have a Minimum EBITDA of not less than $200,000.00 on 3/31/2018 with a trailing three months. This covenant will be measured quarterly.

EBITDA means for any period, consolidated net income of the Borrower(s) 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 Adjustments approved by the Bank.

Unused Line Fee . Borrower shall pay an unused line fee in an amount equal to 0.250% per annum on the difference between the amount of the Promissory Note and the average principal balance of the Promissory Note dated September 30, 2015 between Borrower and Lender in the original principal an1ount of $3,500.000.00 known as loan number 8197223. This covenant will be tested on a quarterly basis.

The Loan Agreement as amended hereby shall continue in full force and effect until such time as all of Borrower's obligations and indebtedness to Lender have been paid in full, including principal, interest, costs and expenses.

Borrower confirms and acknowledges to Lender that (i) all of the representations. warranties and covenants contained in the Loan Agreement as of the date of the Amendment are true and correct in all material respects and (ii) there now exists no event of default under the Loan Agreement or any event or omission that with the giving of notice or the passage of time would constitute an event of default under the Loan Agreement.

Except as expressly set forth in this Amendment, all terms and conditions of the Loan Agreement and all other instruments, agreements and documents executed in connection with the Loan Agreement and the Notes shall remain unmodified and in full force and effect.

Electronic Signature. This Amendment to Loan Agreement may be signed and transmitted electronically or by facsimile machine or telecopier; the signature of any person on an electronically (including without limitation, as a portable digital format document (.pdf) or facsimile transmitted copy hereof shall be considered an original signature; and an electronically or facsimile transmitted copy hereof shall have the same binding effect as an original signature on an original document. At the request of any party hereto, any electronic, facsimile or telecopy copy of this Amendment shall be re-executed in original form. No party hereto may raise the use of electronic mail, a facsimile machine or telecopier or the fact that any signature was transmitted through the use of electronic mail or a facsimile or telecopier as a defense to the enforcement of this Amendment.

ORAL AGREEMENTS. ORAL OR UNEXECUTED AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGR EEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

IN WITNESS WHEREOF, the undersigned have executed this Amendment as or the date and year first above written.

FIRST AMENDMENT TO LOAN AGREEMENT

Loan No: 8197223

(Continued)

Page 2

BORROWER:

RELIV' INTERNATIONAL, INC.

By:	/s/ Ryan A. Montgomery	By:	/s/ Steven D. Albright
Ryan A. Montgomery, President of RELIV' INTERNATIONAL, INC.		Steven D. Albright, Chief Financal Officer of RELIV' INTERNATIONAL, INC.

RELIV', INC.

By:	/s/ Ryan A. Montgomery	By:	/s/ Steven D. Albright
Ryan A. Montgomery, President of RELIV', INC.		Steven D. Albright, Chief Financial Officer of RELIV', INC.

By:	/s/ Brett M. Hastings
Brett Hastings, Chief Operating Officer of RELIV', INC.

RELIV' WORLD CORPORATION

By:	/s/ Ryan A. Montgomery	By:	/s/ Steven D. Albright
Ryan A. Montgomery, President of RELIV' WORLD CORPORATION		Steven D. Albright, Chief Financial Officer of RELIV' WORLD CORPORATION

SL TECHNOLOGY, INC.

By:	/s/ Steven D. Albright	By:	/s/ Brett M. Hastings
Steven D. Albright, Treasurer of SL Technology, Inc.		Brett Hastings, Secretary of SL Technology, Inc.

LENDER:

ENTERPRISE BANK & TRUST

By:	/s/ Kenneth R. Gumper, Jr., SVP
Authorized Officer

Exhibit 10.2

CHANGE IN TERMS AGREEMENT

Principal	Loan Date	Maturity	Loan No	Call / Coll	Account	Officer	Initials
$3,500,000.00	09-30-2016	04-30-2018	8197223	UG		*******

References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

Borrower:

RELIV' INTERNATIONAL, INC.; RELIV', INC.; RELIV' WORLD CORPORATION; and SL Technology, Inc.

136 Chesterfield Industrial Boulevard

Chesterfield, MO 63005

Lender:

Enterprise Bank & Trust

St. Peters

300 St. Peters Centre Boulevard

St. Peters, MO 63376

Principal Amount: $3,500,000.00

Date of Agreement: September 30, 2016

DESCRIPTION OF EXISTING INDEBTEDNESS. A Promissory Note dated September 30, 2015 in the original amount of $3,500,000.00, as amended (the "Note").

DESCRIPTION OF COLLATERAL . collateral described in a Deed of Trust and an Assignment of Rents dated September 30, 2015 on real property known as 136 Chesterfield Industrial Boulevard, Chesterfield, MO 63005, and collateral described in an Assignment of Life Insurance Policy dated September 30, 2015 and four (4) Commercial Security Agreements each dated September 30, 2015. Failure to identify collateral for this Note shall not constitute a waiver of such collateral.

DESCRIPTION OF CHANGE IN TERMS . The Note shall be amended and modified as follows: The maturity date shall be extended from September 30, 2016 to April 30, 2018.

PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on April 30, 2018. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning October 30, 2016, with all subsequent interest payments to be due on the same day of each month after that.

VARIABLE IINTEREST RATE. The interest rate on this loan is subject to change from time to time based on changes in an independent index which is rate per annum equal to the ICE London Interbank Offered Rate in United State dollars for a thirty (30) day period as it appears in the Wall Street Journal, Money Rates Section, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation. The initial LIBOR Rate applicable hereunder shall be the LIBOR Rate in effect on the first Business Day of the calendar month in which this Note is dated. The LIBOR Rate shall be adjusted on that date which is thirty (30) days following the date of this Note. And again subsequently adjusted on every thirty (30) day anniversary period occurring thereafter until all indebtedness owing under the Note is paid in full using the LIBOR Rate in effect on the first Business Day of the calendar month in which each LIBOR Rate adjustment occurs. As used herein "Wall Street Journal Money Rates Section” means the display page currently so designated on the Wall Street Journal Money Rates Section (or such other page or such other service as may replace Wall Street Journal Money Rates Section). Notwithstanding the foregoing, in no event shall the LIBOR Rate be deemed to be less than zero. As used herein "Business Day" shall mean any day other than a Saturday, Sunday or a legal holiday in which banks are authorized or required to be closed for the conduct of commercial banking business in St. Louis, Missouri. Lender's internal records of applicable interest rates shall be determinative in the absence of manifest error. The independent index described herein sometimes referred to as the index (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often than each month. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 0.494% per annum. Interest on the unpaid principal balance of this loan will be calculated as described in the “IINTEREST CALCULATION METHOD" paragraph using a rate of 2.250 percentage points over the Index, resulting in an initial rate of 2.744%. NOTICE: Under no circumstances will the interest rate on this loan be more than the maximum rate allowed by applicable law.

INTEREST CALCULATION METHOD. Interest on the loan is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this loan is computed using this method. This calculation method results in a higher effective interest rate than the numeric interest rate stated in the loan documents.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue this Agreement. If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions.

ELECTRONIC TRANSMISSION OF SIGNATURE. This Change in Terms Agreement may be signed and transmitted electronically by facsimile machine or telecopier; the signature of any person on an electronically including without limitation, as a portable digital format document (.pdf) or facsimile transmitted copy hereof shall be considered an original signature; and an electronically or facsimile transmitted copy hereof shall have the same binding effect as an original signature on an original document. At the request of any party hereto, any electronic, facsimile or telecopy copy of this Change in Terms Agreement shall be re-executed in original form. No party hereto may raise the use of electronic mail, a facsimile machine or telecopier or the fact that any signature was transmitted through the use of electronic mail or a facsimile or telecopier as a defense to the enforcement of this Change in Terms Agreement.

CHANGE IN TERMS AGREEMENT

Loan No: 8197223

(Continued)

Page 2

PRIOR TO SIGNING THIS AGREEMENT, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. EACH BORROWER AGREES TO THE TERMS OF THE AGREEMENT.

BORROWER:

RELIV' INTERNATIONAL, INC.

By:	/s/ Ryan A. Montgomery	By:	/s/ Steven D. Albright
Ryan A. Montgomery, President of RELIV' INTERNATIONAL, INC.		Steven D. Albright, Chief Financal Officer of RELIV' INTERNATIONAL, INC.

RELIV', INC.

By:	/s/ Ryan A. Montgomery	By:	/s/ Steven D. Albright
Ryan A. Montgomery, President of RELIV', INC.		Steven D. Albright, Chief Financial Officer of RELIV', INC.

By:	/s/ Brett M. Hastings
Brett Hastings, Chief Operating Officer of RELIV', INC.

RELIV' WORLD CORPORATION

By:	/s/ Ryan A. Montgomery	By:	/s/ Steven D. Albright
Ryan A. Montgomery, President of RELIV' WORLD CORPORATION		Steven D. Albright, Chief Financial Officer of RELIV' WORLD CORPORATION

SL TECHNOLOGY, INC.

By:	/s/ Steven D. Albright	By:	/s/ Brett M. Hastings
Steven D. Albright, Treasurer of SL Technology, Inc.		Brett Hastings, Secretary of SL Technology, Inc.

LENDER:

ENTERPRISE BANK & TRUST

By:	/s/ Kenneth R. Gumper, Jr., SVP
Authorized Officer

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:

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;

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;

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

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):

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

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: November 14, 2016

	/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.;

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: November 14, 2016

	/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 September 30, 2016, 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: November 14, 2016

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

Date: November 14, 2016

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.